Binance’s share of BTC volume has fallen 50%: Kaiko Research

Binance remains the world’s largest cryptocurrency exchange platform measured by trading volume. Over the past several months, the exchange’s liquidity was greatly boosted by the introduction of no-fee trading for Bitcoin (BTC) pairs.

That picture has changed significantly over the past five days.

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After Binance halted the zero-fee bitcoin trading for 13 BTC pairs, its market share of the volume has fallen by 50%. The reversal has left Binance’s liquidity in a flux, digital assets research firm Kaiko noted in an update on Monday, 27 March.

Binance sees no-fee BTC volume shrinks from 66% to below 30%  

On 8 July 2022, Binance introduced its zero fees promotion for bitcoin trading, providing the feature across 13 BTC pairs. According to on-chain data shared by Kaiko, the zero-fee trading volume spiked in the months after the launch to account for the majority of Binance’s daily trading volume.

By mid-March 2023, the no fee daily volume for BTC rose 66% of total daily volume. Binance had accounted for 20% more daily volume compared to rivals as incentivized users flocked to the exchange. However, since the exchange reinstated fees across all the pairs volume resulting from Bitcoin spot trading has fallen sharply.

Data as of 27 March showed halting the zero-fee promotion has impacted Binance’s market share of total volume. After reaching a commanding 66% this March, the exchange’s market share of Bitcoin volume has declined more than 50% to below 30%.

Binance’s global market share declined 10% last week

The removal of no-fee trading for Bitcoin has also impacted Binance’s share of the global market volume. 

Kaiko analysts opine in a report shared with Invezz that while a 2-hour outage last week could have contributed to the scenario, no doubt reintroducing trading fees is one factor that saw Binance’s global share fall by 10% in the past week.

BTC/USDT pair most impacted with 90% decline in volume

The trading pair most impacted by last week’s reversal is the BTC/USDT pair. According to Kaiko analysts, the average volume for Tether, cryptocurrency’s most liquid market, has shrunk a massive 90%.

While Binance ended the no-fees trading for multiple BTC pairs, it did introduce the feature for the stablecoin TrueUSD (TUSD). In so doing, it has boosted the BTC/TUSD pair, with hourly volume rising an average of roughly $5 million. However, the zero-fees volume for the BTC/TUSD pair accounts for only 2.8% of total volume.