Binance Bitcoin Trading Volume Plunges 13% – Lowest Level in 8 Months

Binance’s daily trading volume for Bitcoin (BTC) has fallen to its lowest levels since July 4, 2022, as a result of ending its zero-fee trading for all trading pairs except TrueUSD (TUSD), according to Kaiko data.

Kaiko researcher Riyad Carey pointed out that the last time Binance’s volume went this low was two days before it introduced its zero-fee trading options. According to him, the decline in volume coincided with the end of free trade.

Binance ended the free trading option for most of BTC’s stablecoin pairs on March 22 – citing the recent regulatory issues facing the space. The free trading option helped the exchange increase its market share to 72% from 50.5% – it also accounted for about 61% of the total volume.

Meanwhile, Binance’s BTC-TUSD market share increased to roughly 10% while BTC-USDT volume on the exchange plunged to 68% from 81%.

Since Binance phased out zero-fee trading, TUSD’s liquidity has increased by more than 250% – while the liquidity of stablecoins such as Tether’s USDT and Binance USD (BUSD) has decreased by more than 60%, respectively.

Bitcoin’s declining liquidity

While Bitcoin has rallied around 70% this year, market liquidity around the flagship digital asset has fallen to a 10-month low. Market liquidity is how easy it is to trade an asset without affecting its price.

Kaiko’s Conor Ryder noted that the recent collapse of crypto-friendly banks has deeply affected US-based exchanges due to the closure of US dollar payment rails. He added that “market makers in the region [are] is facing unprecedented challenges for its operations.”

According to Ryder, USD pair spreads have suffered more volatility due to the uncertainty surrounding the crypto industry in the US. Apart from that, slippage on US-based exchanges has increased due to these issues.

For context, the slippage of a BTC-USD 100,000 sell order on Coinbase has increased by 2.5x from what it was at the beginning of March, while for Binance it has barely moved.

Meanwhile, the increased tightening of USD supply has led to exchanges turning to stablecoins. According to Kaiko data, stablecoins now account for 95% of trading volumes on centralized exchanges.

Ryder noted that while the pivot to stablecoins dampens the impact of US banking issues, it affects liquidity in the country and could indirectly hurt.