According to blockchain analytics firm Kaiko, bitcoin arbitrage on Binance.US is indicative of illiquidity in the market, but not evidence that market makers are leaving the platform.
In a report on May 9, the data aggregator explained why Bitcoin was trading at a 2.5% premium on Binance.US compared to other U.S. exchanges.
According to the company, speculation that market makers may leave the platform are just rumors as there is no change in its market depth. Since April, several crypto community members have highlighted the growing premium for bitcoin on the platform, with many speculating that market makers and insiders may be leaving due to possible legal action.
However, Kaiko refuted such claims, noting that the exchange’s scramble for banking partners may have played a role in the transaction.
“The premium on Binance.US is likely related to the exchange’s efforts to find a banking partner following the closure of Signature Bank and Silvergate Bank. With overall demand for BTC growing, Binance.US investors may expect BTC withdrawal times to be faster than The dollar is faster and simultaneously flocks to trade BTC, leading to an increase in exchange premiums.”
Bitcoin Market Depth | Source: Caico
Compared to global exchange Binance (where BTC 1% market depth alternates between several highs and lows), the depth of Binance.US remains stable. Data from Kaiko highlights that this would not have happened if major market makers had left the platform.
The crypto industry is at risk of low liquidity following the U.S. banking crisis in March. At the time, BTC orders hit a 10-month low.
Another report highlighted that liquidity has declined at US-based exchanges and market makers, as they appear to be the most affected by the Silvergate crash.
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