Hemorrhage of market makers and liquidity on Binance.US

Threatened with closurestop by the SECthe crypto exchange Binance.US already records consequences of the procedure against him. The liquidity of various tokens is in free fall and the market makers fleenotes Kaiko.

“The corrective measures proposed by SEC would effectively put an end to the business,” warns Binance.US. The regulator is in fact endeavoring to freeze the crypto exchange’s funds. A “draconian and unduly restrictive” measure, it denounces.

While the courts have yet to rule, the exchange’s US subsidiary is already feeling the negative consequences of the proceedings brought against it. Binance.US is ” bloodless “says Kaiko in an analysis note.

80% drop in market depth

One week after SEC action, market makers and traders massively deserted. Visit liquidity level translates this unambiguously. Measured by the aggregate depth of market for 17 tokens on the exchange, it has fallen from nearly 80% over the past week.

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On June 4, the day before the SEC action, the depth of the market was $34 million. Today it is [12 juin]it’s only $7 million”, says Kaiko.

And Binance.US is not the only market player to suffer from this phenomenon. Coinbase and Binance (global) have also experienced a decline in market depth since the lawsuits. However, the decline is less than for Binance.US.

Nervous market makers

From Coinbasewhich is also the subject of an SEC complaint, the drop in liquidity is around 16%. For Binance, since the beginning of June, it has fallen by 7%. The world’s leading stock market initially escaped this trend. Market depth was maintained and even increased immediately after the complaint.

However, Binance was eventually caught up in the global trend. Liquidity deteriorated over the past weekend as altcoin prices collapsed. For Kaiko, this deterioration reflects the market makers’ nervousness.

Market makers are nervous, and want to avoid losses induced by volatility and the not insignificant possibility of their assets being locked up on an exchange following the example of the FTX collapse”, suggests the study.

Coinbase’s market share soars

As far as the market shares of the various exchanges are concerned, the current proceedings are primarily aimed at Binance.US. The latter “is by far the exchange that has suffered most among the three targeted exchanges”.

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In April, Binance.US claimed a 20% market share. Now, this indicator has collapsed to just 4.8%. Is Coinbase another big loser? On the contrary. Its market share soared last week, jumping from 46% to 64%..

Coinbase risks big in the U.S.

For Kaiko, however, the reasons for this surge are considered “obscure”. For example, the analyst continues, “no particular asset has experienced an unusual increase in trading volume” that would justify an increase in PDM.

Coinbase could theoretically be the most threatened by SEC action. In any case, it’s the crypto exchange most exposed to the US marketwhich accounts for 80% of its revenues.

On the contrary, “the Binance.US entity represents only a small fraction of Binance’s overall business”. The charges are more serious, however.

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