Bitcoin news: Binance loses 16% market share

In this article we will examine the latest news in the world of cryptocurrencies, especially regarding the performance of Bitcoin and the delicate situation that Binance is going through.

In recent months, the world’s largest cryptocurrency exchange has seen its hegemony in the market shrink.

The reason? We find out together in this article.

Bitcoin News: Binance in trouble after filing CFTC lawsuit

Binance, the world’s largest cryptocurrency exchange by volume, is going through a delicate phase in its existence.

It is facing a lawsuit filed by the Commodity Futures Trading Commission (CFTC) for alleged violations on derivatives trading.

The CFTC reportedly filed the lawsuit in federal court in Chicago, accusing Binance of allowing US citizens to purchase derivative products without having previously registered with the agency.

It is well known that in the United States it is necessary to register with several agencies before being allowed to offer trading services through highly speculative products, such as Binance’s Perpetual Futures. 

This is because the American investor must be protected at all times in order not to be exposed to systemic risks of brokers offering such services.

All this has led many investors to flee with their capital outside the exchange led by Changpeng Zhao and his team.

After the several crashes that have happened in the history of cryptocurrencies (e.g. Mt. Gox and FTX), cryptocurrency holders on centralized exchanges seem to have decided that in uncertain situations it is better to make a “safe” play and move all funds to another exchange or preferably to a hardware wallet, such as Ledger or Trezor.

After all, why risk losing everything for low returns ( usually those offered by exchanges)? It is far better to risk nothing and move one’s funds around while the dust settles.

The negative effects on Binance have been evident: in the first quarter of 2023, the exchange lost 16% of its market share, albeit remaining at the top of the leaderboard with 54% dominance.

Bitcoin News: Binance is also suffering due to the end of 0 fee promotion on 13 spot trading pairs

Contributing to the decline in Binance’s market share was the announcement of the end of the 0 fee promotion on 13 Bitcoin (BTC) spot trading pairs.

The impact that 0 fee trading generates is very important because it allows for much higher market share than would have been achieved without discounting.

In the case of Binance, the March promotion would have allowed the CZ exchange to achieve 66% hegemony over total crypto market volumes.

However, once they had halted this promotion, capital flight was massive.

The BTC-USDT pair, the most liquid and traded pair in the market, reportedly lost 90% volume after the promotion ended.

Traders prefer to trade on pairs where there are low fees and where there are reliable reference stablecoins.

In this regard, it seems that Binance wants to push the adoption of the TUSD stablecoin.

Indeed, the only trading pair remaining at 0 fee is precisely BTC-TUSD.

The reasons for this choice are not yet clear: we could speculate internal fears related to the fallacy of the BUSD stablecoin in adapting to the increasingly stringent regulations of US supervisory and control bodies.

In any case, according to Kaiko’s data, BTC-TUSD to date accounts for 2.8% of the total volume on Binance.

How is Bitcoin performing while Binance is under stress?

At the time of writing, BTC trades at about $28k, with a market capitalization of $542 billion, trading volumes in the last 24 hours exceeding $19 billion, and market dominance at 46.1%.

While Binance is going through a delicate period for its infrastructure, Bitcoin does not seem to be bothered.

The industry’s leading cryptocurrency does not seem to have experienced any price declines as a result of Binance’s vicissitudes triggered by the CFTC lawsuit or even the end of the 0 fee promotion.

Most likely, the reason has to do with the fact that Bitcoin is seen as a key asset to hold in one’s portfolio, especially as fears related to the alleged debt crisis of US banks come to a head.

It is enough to think that the failure of Silicon Valley bank, on the day of 9 March 2023 alone, evaporated about $50 billion in market capitalization from the stock market.

It will be a coincidence that Bitcoin’s bullish momentum that brought it up to the close of $30k began just 2 days after that event.

Investors are afraid of a US banking crisis like in 2008.

This time around, though, it appears that withdrawals from US checking accounts have reached an all-time high, with a run of nearly $400 billion in March 2023 alone.

By far the largest bank run in US history.

Bitcoin benefits from all of this.

It is also very interesting to note what the volatility correlation relationships are between BTC and NASDAQ.

Bitcoin is increasingly seen as a safe haven asset while the Nasdaq is up more than 20% from its December lows.

Both appear to be appreciated assets for investors but the volatility gap between the two sides has reached an all-time high.

While Nasdaq has seen its volatility in the market reduced, probably due to the willingness of stock market investors to reduce their risk, Bitcoin has seen that figure increase, as the depth of the crypto world is at its lowest since several months ago.