The world’s largest cryptocurrency exchange Binance has decided to automatically convert USDC deposits to BUSD. JPMorgan says that this decision by Binance will make Tether (USDT) even more important when it comes to trading. According to the report, Tether’s large daily trading volumes represent a serious opportunity.
“Binance stablecoin decision will bring Tethher to the fore”
Starting September 29, Binance will convert existing balances and new deposits of USDC, USDP and TUSD stablecoins into its own stablecoin, BUSD. In addition, it will also terminate trading pairs for major cryptocurrencies such as Bitcoin and Ethereum, as well as three stablecoins against BUSD and Tether (USDT). JPMorgan Chase analysts suggest that this stablecoin decision by Binance will benefit Tether.
In particular, JPMorgan notes that this decision will increase Tether’s importance in crypto trading. “In our view, this decision appears to increase the importance of Tether in the stablecoin universe threatened by USDC,” analysts wrote in a research note on Wednesday. The investment bank also notes that Tether’s market share in the stablecoin ecosystem has fallen in the past 18 months. Using this as a metric, the bank argues, the stablecoin’s importance diminishes.
Total stablecoin market shareWhat advantage does Tether have over other stablecoins?
As you follow on Kriptokoin.com, Terra Blockchain’s stablecoin TerraUSD (UST) crashed in May. Following this crash, most market shares of UST appear to have been taken over by USDC and BUSD. So Tether has a smaller share. This is a problem, according to the bank’s report. But Tether’s importance is not limited to its market cap. Analysts explain this situation as follows:
In our view, Tether’s importance isn’t just limited to its market cap in the stablecoin universe. It also depends on its use, especially in trading.
Tether is live on 11 different blockchains compared to USDC’s eight. Besides, the annual trading volume is also much higher than USDC, even Bitcoin and Ethereum. The research report says that the average daily trading volume of Tether is ten times that of USDC.
Annual average daily trade volumeBased on these reasons and more, JPMorgan analysts predict that Tether will increase in importance following the September 29 transformation. The bank also notes that by determining the new fee structure, BUSD will gain more importance. In this context, analysts make the following assessment:
Binance now applies zero maker fees to all BUSD trading pairs. It also allows USDT/BUSD trading with zero buyer fees, according to their website.
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