Following the deletion of the free of charge from costs on the BTC pairs, Binance has seen his transaction volume sink from 50%according to Kaiko. The exchange also had to stop the withdrawals and posted a premium price on the BTC at US.
The trend is not new. It was confirmed in April, a month marked by a net decline of the transactions on Binance and of the market share Of the world’s leading cryptocurrency exchange.
At the end of March, the exchange reinstated fees on most Bitcoin pairs. However, users, both retail and institutional, are very sensitive to this variable, even more so during a cycle of bear market.
Binance falls to November 2022 level
According to data from CCData and Kaiko, but also the analysis of Bloombergthe market share of Binance on the spot market is now close to the 50%. The giant remains far ahead of its rivals. However, its market share is back to its lowest level since April 2022.
Recall that it is by removing fees on Bitcoin transactions last July that Binance had fueled its growth. The stock market has well and truly stopped funding the rise of its business – or pulled the plug.
For CCData, the decline is even more significant. The digital asset data provider estimates Binance’s spot market share at what it was when FTX fell in November 2022.
Thus, trading volume shows a 48.1% plunge in April 2023 to $287 billion. Binance hadn’t seen a monthly amount this low since 2021. The company with no fixed headquarters is not an isolated case, however.
Volume on CEX down 40%.
According to CCData, the volume of cash transactions on the centralized exchanges fell by 40%. to its lowest level since December 2022. This trend is said to be due to the macroeconomic climate and the tightening of regulations.
Binance on the other hand, has experienced an episode of its own in the past few days, Kaiko notes. In particular, the company refers to the fact that Bitcoin withdrawals were stopped twice. A decision justified by network congestion and increased fees.
Other exchanges have been able to process BTC transactions, making it a Binance-specific problem. BTC volumes on the exchange have barely increased, which means that this problem is not due to specific concerns about Binance, as was the case in December,” comments Kaiko.
BTC and premium withdrawals freeze: difficulties for Binance
At the same time, the French data specialist noted on May 9 a price gap on BTC Between Binance.US and other U.S. exchanges. Bitcoin was trading with a premium of 2.5%.. This market fact could be related to the freeze on withdrawals.
These events fed the speculationsas is often the case. Market makers or insiders of Binance.US have been informed of the impending legal action, according to rumors. As a result, they would have sought to trade BTC to transfer funds off the exchange. The data suggests a alternative scenario however.
These are just rumors at this point, as evidenced by the lack of change in market depth on Binance.US. If a large market maker left the exchange, we would see an immediate drop in market depth on the exchange,” Kaiko explains.
Binance.US penalized by its search for a banker
The causes of the premium on the price of BTC on Binance.US are to be found elsewhere. This premium is most likely related to the difficulties of the scholarship to find a banking partner since the closure of Signature and Silvergate”.
With increased demand for BTC in general, investors on Binance.US are likely looking for faster withdrawal times for BTC compared to USD, and are rushing to trade BTC at the same time, resulting in a premium on the exchange. This is a symptom of an illiquid market,” the analysts conclude.
Perhaps the most important point is this reminder of the current illiquidity of the market, and one that has persisted since the FTX bankruptcy. It is this characteristic that would mainly explain the price increases in recent weeks and also their fragility.
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