In a proxy indicator for new liquidity entering the Bitcoin (BTC) market, Binance has received a new mint of FDUSD. The asset, controlled almost entirely by Binance, is a source of centralized liquidity, often boosting BTC prices.
New FDUSD may be flowing into Binance for the first time in a month. In the last few weeks, Binance burned part of the supply, decreasing the FDUSD supply from 3.1B to 2.5B tokens. The latest transactions became the first supply increase since the end of August.
First Digital Lab, the issuer of FDUSD, sent out a transaction of 79.94M tokens through the Gnosis Safe Proxy address.
The last time new FDUSD entered Binance markets, Bitcoin (BTC) reacted immediately. The rally from just under $60K to $64K in late August followed the round of 145.5M FDUSD printing that happened at the time. The latest liquidity print arrives after BTC dipped again to $58,731.40.
FDUSD is mostly controlled by First Digital Lab and Binance. Despite its relatively low supply, the token supports multiple highly liquid pairs on Binance. The stablecoin replaced Binance USD and is seen as a more reliable mechanism to safeguard gains.
FDUSD in top 5 based on high-velocity trading
The immediate effect of FDUSD on prices may be due to its high-volume trading. Despite the supply of under 2.6B tokens, FDUSD is in the top 5 based on centralized trading volumes.
FDUSD achieves $4.2B in daily trading volumes, close to the higher range for the past month. Currently, close competitor USDC has $5.2M in daily trading volumes. FDUSD is still far from Tether’s influence and volumes, but it makes up the second most liquid pair on Binance.
BTC/FDUSD trades at a slight discount compared to the fiat pair on Coinbase. The pairing also has only 50% of the market depth compared to BTC/USDT on Binance. Recent volatility also brought back the Korean won premium, with a price of $59,953.93 on Upbit. The sideways movement and low volumes for BTC mean the market may be responsive to new liquidity flows.
The high activity on the FDUSD pair has led to suggestions of wash trading. FDUSD has an extremely high volume to market cap ratio of 158.51%, with an even higher daily turnover during peak trading days. The ratio for USDT is just 39.98%, due to the much higher supply.
FDUSD is also distributed to only 2,111 addresses, though most of the tokens are controlled by Binance, in hot or cold wallets.
The stablecoin recently showed increased transactions on the Ethereum blockchain, while slowing down on Binance Smart Chain. FDUSD has only a handful of remaining DEX trades each day, with most of the volumes relying on centralized activity. A small part of the supply, around $79M, is used within smart contracts on Binance Smart Chain.
BTC seeks supply from stablecoin inflows
The recent inflow of FDUSD coincides with a new supply of freshly printed 1B USDT tokens, waiting to be injected into the market.
Stablecoins also increased their overall activity in the past three months, with 19.23% more transfers for a total of 461M transactions. More than 21M active addresses used stablecoin smart contracts. The overall supply of stablecoins is now estimated at more than 163B tokens, most of them denominated in US dollars.
Stablecoins have various roles for decentralized trading, where some pairs also include high-volume activity.
During the past month, BTC retained its general sideways trading with choppy price action. The Bitcoin fear and greed index still recovered to 39 points, from the “extreme fear” region of 22 points at the end of August. At this point, a new inflow of stablecoins could spark price action, leading a recovery to reclaim the $60,000 range.
The inflow of new FDUSD arrives after a series of sales from BTC whales. Most of the selling originates from new buyers, who have only held for a few months. Two whales took profit on BTC in the past couple of days, exacerbating the dip under $59,000.
BTC also trades at a relatively low volume of $27B in 24 hours, making the leading coin even more dependent on Binance activity.
Cryptopolitan reporting by Hristina Vasileva.
