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BTC Liquidity Plummets 70% on Binance – Here’s Why

BTC Liquidity Plummets 70% on Binance – Here’s Why

The liquidity of BTC-USDT and BTC-BUSD trading pairs on Binance has significantly dropped by about 70% and 60%, respectively, according to data provided by Kaiko.

Researchers at Kaiko attribute the decline in liquidity to Binance’s recent decision to eliminate its flagship no-fee trading feature for all BTC pairs except for BTC/TUSD. Meanwhile, the BTC-TUSD trading pair’s liquidity has impressively increased by over 250% in just 24 hours, from 9 Bitcoin to 29 BTC.

It’s worth noting that Binance’s implementation of zero fees for Bitcoin pairs, which launched in July 2022, has helped the exchange capture an additional 20% of the market share over the past eight months.

However, Clara Medalie, the research director at Kaiko, observed that Binance quietly wound down BUSD auto-conversion earlier this month and re-listed the TUSD stablecoin after de-listing it last September.

READ MORE: Bitcoin Provides Safe Harbor for Investors – InvestAnswers

Medalie noted that while zero-fee trading is not sustainable in the long run, it enabled Binance to gain significant market share in the short term. She also stated that without zero fees for most BTC pairs, a short-term drop in market share could be expected.

Despite the recent decrease in liquidity, the market share of zero-fee BTC pairs on Binance reached an all-time high of 61% last week. Nevertheless, Binance continues to maintain its position as the leader of the crypto spot market, according to CoinMarketCap.

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.

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