margin trading

Binance’s market share drops on CFTC suit and no-fee trading halt: Report

Binance’s market dominance fell largely due to its decision to end zero-fee trading for some trading pairs and not the Commodity Futures Trading Commission’s lawsuit, says blockchain analytics platform Kaiko.

The dominance of cryptocurrency exchange Binance in trading volume market share has slipped over the past two weeks following a lawsuit from the United States commodities regulator and its decision to halt some zero-fee trading.

In an April 4 newsletter, blockchain analytics platform Kaiko reported that Binance “lost 16% market share of trade volume,” with its market share at 54% as of the end of Q1.

The U.S. Commodity Futures Trading Commission sued Binance on March 27, alleging it flouted regulatory compliance and violated derivatives laws by offering trading to U.S. customers without registering with market regulators.

Kaiko said Binance still takes in more volume than the rest of its combined competitors, but its March 15 decision to end zero-fee spot and margin trading for 13 trading pairs, including BNB (BNB), Bitcoin (BTC) and Ether (ETH) with multiple fiat currencies and stablecoins, led to a loss in trading volume.

“Overall, Binance’s excess volume largely vanished with the end of zero-fee trading, which was reflected in an even dispersal in market share among the remaining exchanges,” Kaiko reported.

*Binance’s market share trading volume among the top centralized exchanges fell to 54% by the end of the first quarter. Source:* *Kaiko*

Kaiko explained part of this fall was alleviated by its U.S. arm, Binance.US, which managed to triple its market share over the quarter from 8% to 24%.

Binance didn’t fall excessively in every domain, though. The exchange managed to largely maintain its derivatives dominance, only giving up 2% market share over the last quarter.

Kaiko explained that the fall in trading volume figures was influenced mostly by the end of zero-fee spot trading as opposed to the CFTC lawsuit:

“The trend is quite different when looking at derivatives volumes: Binance only lost about 2% of market share for perpetual futures trade volume. This suggests that the majority of market share was lost purely due to the end of zero-fee spot trading, rather than trepidations around a lawsuit.”

The market share fall to 54% comes after Binance was one of the “big winners” of the FTX fiasco, which saw its market share in trading volume rise to 65% during the last quarter of 2022:

“Binance’s market share increased from 50% to 65% after November 2022, while OKX saw its market share increase from under 10% to 17%. Bybit and the three smaller exchanges Huobi, Bitmex and Deribit, on the other hand, saw their market share decline.”

Over the last quarter, Upbit was the only crypto exchange that reclaimed a “significant share” in trading volume of the 17 trading platforms that Kaiko analyzed.

In light of recent regulatory pressures, the banking crises and the catastrophic collapse of FTX, many reports have observed a growing trend towards decentralized alternatives and self-custody wallets.

Bitcoin and Ether left centralized exchanges in record numbers following the fall of FTX. The daily trading volume of decentralized perpetual exchanges also reached $5 billion in November 2022, the most since Terra Luna Classic (LUNC) and its connected TerraClassicUSD (USTC) stablecoin collapsed in May 2022.

Trading volumes on the decentralized exchange Uniswap are now rivaling that of crypto exchanges Coinbase and OKX but are still only a fraction of that processed by Binance.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

Bitcoin price recovery possible after record realized losses and leverage flush out create a healthier market

On-chain analysis highlights a slow down in selling and improving investor sentiment which could help BTC price recover.

Bitcoin (BTC) price is showing notable resilience at the $17,000 level, and according to data from Glassnode, a number of metrics that track the pace of selling and the on-chain behavior of investors are beginning to show a reduction in the factors that trigger sharp sell-offs.

The FTX bankruptcy fueled a historic sell-off resulting in $4.4 billion in realized Bitcoin losses. By analyzing realized losses with the daily weighted average metric, Glassnode analysts found that the on-chain losses are subsiding.

According to Glassnode, Bitcoin hit an all-time low in the realized profits versus losses ratio. Toward the end of the most recent bull market, realized losses were 14 times larger than profits, which historically coincided with a positive market shift.

Bitcoin realized profit and loss. Source: Glassnode

The on-chain data also shows realized losses are declining and Bitcoin price is above the balanced price and realized cap is dropping, removing excess liquidity generated from over-leveraged entities.

BTC balanced and delta price. Source: Glassnode

Realized cap suggests excess liquidity is drained

The realized cap is the net sum of Bitcoin capital inflows and outflows since BTC’s launch.

The current realized cap is 2.6% higher than the May 2021 peak, suggesting that Bitcoin’s all-time high has retraced and all excess liquidity from bad debt and over-leveraged entities has been drained from the market.

Historical realized cap trends. Source: Glassnode

In the past, as bad debt was removed from the ecosystem, a launch pad for future bull markets was established.

According to the analysts:

“The 2010-11 realized cap saw a net capital outflow equivalent to 24% of the peak. The 2014-15 realized cap experienced the lowest, yet non-trivial capital outflow of 14%. The 2017-18 recorded a 16.5% decline in realized cap, the closest to the current cycle of 17.0%. By this measure, the current cycle has seen the third largest relative outflow of capital, and has now eclipsed the 2018 cycle, which is arguably the most relevant mature market analogue.”

The bottom could possibly be in

Balanced price and delta price are algorithmic analyses used to revisit previous bear cycles. In previous bear cycles, Bitcoin’s price has traded between the balanced price and the delta price 3.0% of the time.

The current balanced price range is between $12,000 and $15,500 with the current delta price concentrating between $18,700 to $22,900. Concurrent with previous bear markets, Bitcoin’s price is above the balanced price, finding support at $15,500.

While a market bottom has yet to be found, and a handful of potential downside catalysts remain, on-chain analysis is showing that the sentiment of market participants is slowly shifting out of bearish extremes, with the peak of realized losses and forced selling seemingly concluded.

A tighter view of Bitcoin holders’ acquisition cost will also make anticipating reactions to possible upcoming volatility easier. A large amount of excess liquidity has dissipated, possibly creating a firmer price floor for a sustainable BTC price recovery.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin price recovery possible after record realized losses create a healthier market

On-chain analysis highlights a slowdown in selling and improving investor sentiment which could help BTC price recover.

According to Glassnode, Bitcoin hit an all-time low in the realized profits vs. losses ratio. Toward the end of the most recent bull market, realized losses were 14 times larger than profits, which historically coincided with a positive market shift.

The on-chain data also shows that realized losses are declining and Bitcoin price is above the balanced price and realized cap is dropping, removing excess liquidity generated from over-leveraged entities.