How Binance drove Bitcoin’s spot volume to a new low

Posted: September 21, 2023

• Bitcoin’s spot volume on Binance dropped by 57% between 1 and 20 September.
• While the BTC/TUSD fee changed, Bitcoin may not experience any notable selling pressure.

Bitcoin’s [BTC] spot volume hit a 35-month-low after it fell another 8% in the last seven days, according to K33 Research. When measuring spot volumes for any asset, the right place to look at is the exchanges. This is because they are the ones who provide trading pairs on the spot market.

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Binance pushes Bitcoin’s drop

One cogent reason the king coin’s volume decreased was the seven-day spot volume on Binance, which fell by 57% since September began.

Source: K33 Research

For the most part, the decrease could be linked to the regulatory battles that Binance seemed to be fighting. However, that was not the case, as a certain decision appeared to be the driving force behind the plunge.

On 7 September, Binance took an unexpected decision to change the fees accustomed to the BTC/TUSD pair. According to the exchange, the taker fee on the pair changed from zero to rate based on the VIP level any user was.

As a result of the decision, the BTC/TUSD volume, which boasted 380,000 Bitcoins involved between 31 August and 6 September, fell to 90,000 Bitcoins between 7 and 14 September.  This drop signaled the displeasure traders had with the decision to change the fee rate.

At the same time, the resolution could be linked to Binance’s desire to increase the usage of the First Digital USD [FDUSD]. 

Recall that Binance had announced the introduction of the stablecoin as a potential replacement for Binance USD [BUSD], which was in a phasing-out stage. So, it was not surprising when FDUSD’s market cap grew by 51% to reach $394 million on 6 September.

Calm in between the storm

On looking at the exchange netflow, CryptoQuant showed that Bitcoin had a netflow of -4,191. This metric is the difference between Bitcoin flowing into exchanges and those flowing out. For spot exchanges, high values indicate selling pressure. 

However, the value mentioned above was in the negative region. So, Bitcoin was not experiencing any major selling pressure up until press time. 

Source: CryptoQuant

The exchange netflow inference was further reinforced by the seller exhaustion constant. The Bitcoin seller exhaustion constant is the product of the 30-day price volatility and the percentage supply in profit.

Whichever value is gotten from this calculation shows low-risk bottoms or high-risk tops.

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At the time of writing, Bitcoin’s seller exhaustion constant was 0.023. A value like the one mentioned here implied that the broader market was not looking to sell BTC at press time.

Source: Glassnode

It also reflected a possible chance of buying Bitcoin at a price very close to the bottom, considering the current cycle. Therefore, regardless of the Binance volume drop, Bitcoin’s price may not experience a sharp decrease anytime soon.