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Record $113M BUSD stablecoin inflow shows Binance is serious about DeFi

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New data from CryptoQuant, an on-chain analytics firm, shows $113 million worth of Binance USD (BUSD) has flowed into Binance exchange over the past week. This means BUSD stablecoin now has the highest potential buying power over all other USD-based stablecoins except for Tether (USDT).

BUSD inflow to Binance. Source: CryptoQuant

Binance’s new USD-backed stablecoin is ERC-20-based and was launched in 2019 in partnership with Paxos. Since then, BUSD has steadily been gaining traction as its volume increased and recently surpassed that of USD Coin (USDC) on Sept. 4.  

Main USD-backed stablecoin contenders - 24h volume (USD)

Main USD-backed stablecoin contenders – 24h volume (USD). Source: Skew

Binance wants a slice of the DeFi pie

With a $363 million market capitalization, BUSD is the third largest stablecoin on the market. However, as Binance continues to grow its offerings it’s possible that BUSD may become a larger player in the stablecoin and DeFi space which has largely been dominated by USDT.

Binance has already expressed its strong interest in playing a larger role in DeFi and on Sept. 1 the exchange debuted its Binance Smart Chain. 

Binance chain allows DeFi protocols to run on top of it, with lower fees than the Ethereum blockchain and BNB staking is also available through the platform.

On Sept. 11, popular DeFi protocol, C.R.E.A.M. announced that it would shift to Binance Chain and unlike most DeFi platforms, the protocol supports yield farming for BNB, BUSD, BTC, ETH, XRP, BCH, and LTC.

Recently, Binance also unveiled Launchpool platform, a new venue which allows users to farm assets like BUSD. The first project on the platform is Bella protocol and where users will be able to stake their BNB, BUSD, and ARPA tokens.

Stablecoins post triple-digit growth in 2020, but institutional rivals loom

2020 has been a massive growth year for stablecoins, largely due to the explosion of decentralized finance and yield-related protocols. 

According to Coin Metrics, the market capitalization for most USD-based stablecoins has been increasing steadily by around $100 million daily for almost two months due primarily to these liquidity pools.

This growth seems largely dependent on the DeFi ecosystem and even if it continues to grow, stablecoins still face some challenges ahead, with the advent of central bank digital currencies (CBDC) being one of them. 

It’s also possible that major financial institutions and corporations may become contenders to the current stablecoin ecosystem if they develop their own digital currencies and blockchain networks.



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Institutions have no appetite for Bitcoin at this price level: JPMorgan

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As Bitcoin (BTC) price failed to hold its breath above the $35,000 yesterday, JPMorgan expects an overall bearish movement below the critical price level based on the BTC-to-gold volatility ratio. 

In a note sent to investors on Wednesday, JPMorgan detailed its reasoning to see the fair value of Bitcoin between $23,000–$35,000 over the medium term. The banking giant previously pictured a $140,000 roadmap if the biggest cryptocurrency matches gold’s allocation and volatility profile.

But that’s off the table for the foreseeable future, according to JPMorgan’s note, which predicts that “full convergence or equalization of volatilities or allocations [between gold and bitcoin] is unlikely in the foreseeable future.“

JPMorgan also said that China’s crackdown on mining operations would have a positive impact on Bitcoin over the medium term, “as it accelerates a shift away from China’s high share in bitcoin’s hash rate, reducing concentration.”

Not many institutions are joining MicroStrategy’s hunt to buy the dip. “More than a month after the May 19 crypto crash, bitcoin funds continue to bleed, even as inflows into physical gold ETFs stopped,” JPMorgan said, adding:

“This suggests that institutional investors, who tend to invest via regulated vehicles such as publicly listed bitcoin funds or CME bitcoin futures, still exhibit little appetite to buy the bitcoin dip.”

Related: Bitcoin price dips below $34K as day of Grayscale’s BTC unlocking draws near

According to JPMorgan, another major factor preventing a possible bull run is the end of a six-month lock-up period for the Grayscale Bitcoin Trust fund, which saw a nearly $4 billion inflow in December and January. As Cointelegraph reported, July 19 will see the most significant single unlocking day, with 16,000 BTC worth around $627 million released.

Following the April all-time high, Bitcoin is hovering between $30,000–$40,000 for the last couple of weeks. After diving below $29,000 on June 22, BTC price is moving around $34,000, according to Cointelegraph Markets Pro and TradingView data.