The gap between Bitcoin’s price on popular exchanges such as Binance, Coinbase and Binance.US has widened dramatically this month, confusing cryptocurrency commentators on Twitter. Since then, there has been a wave of controversy on this matter.
Today at 16:26, BTC/USD on Binance.US is trading at almost $650 more than other partners such as Coinbase or Binance. This is a spread not seen since April, when the BTC/USD pair was also trading at a $20 spread.
According to the analyst, who goes by the pseudonym @fewseethis on Twitter, the spread is likely the result of market makers leaving exchanges under the current regulatory action. Therefore, the task of a market maker is to provide liquidity to the order book.
In February, the U.S. Securities and Exchange Commission (SEC) targeted Binance.US for trading affiliates. An agency official said in March that Binance.US operates an unregistered securities exchange in the United States. “If the government takes some action against Binance.US in the short term and the market makers know this, they may leave the exchange without enough liquidity and arbitrage capabilities emerging. Show more,” shared @fewseethis .
According to data from Cryptowatch, at the time of writing, the Binance.US order book is already biased in favor of bids. According to Griffin Ardern, a trader at crypto asset manager Blofin, this is a sign of weakening market depth and the departure of market makers.
Order book imbalance with more pending buy orders (green line) than sell orders | Source: Cryptowatch
This chart shows 2.5% market depth on Binance.US, which is a group of pending buy and sell orders within 2.5% of the average price. The average price is the average of the bid and ask prices. A green line indicates the number of pending buy orders, and a line above the red line indicates sell orders.
“When liquidity is plentiful, the depth of buyers and sellers tends to be constantly changing, but maintains a dynamic balance. On Binance.US, the order book is unbalanced, with significantly more buy orders than sell orders,” Ardern told CoinDesk. “Such a depth chart is certainly unusual for a large exchange. Major market makers are leaving Binance.US, likely due to regulatory pressure and new regulatory requirements.”
Additionally, Tether, the world’s largest stablecoin, rose to $1.3 on Binance.US on Monday, unlike its peg of $1. Earlier today, the stablecoin continued to be overvalued.
Tether rallied to nearly $1.3 on Monday, as opposed to flat at $1 | Source: TradingView
The reason for Tether’s high valuation is unclear. Some in the crypto community attribute the USDT/USD pair’s rise to the fact that Binance.US’s BTC/USD pair is higher than Tether (BTC/USDT) trading pair.
In contrast, others, including prominent trader Byzantine General and Alice, a market maker at cryptocurrency exchange OPNX, said the premium meant fiat withdrawals at the exchange were problematic. . “This USDT fee won’t matter if fiat withdrawals work as normal,” General Byzantine tweeted. “Can’t people quit Binance.US?” Alice echoed the sentiment: “There must be some secret USD fee, otherwise the USD withdrawal will not work.”
The BinanceUS premium is still there.
What the hell is going on there. pic.twitter.com/Tfg4Ij8npz
— Byzantine General (@ByzGeneral) May 8, 2023
Currently, the media has contacted Binance.US for clarification and is waiting for a reply.
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According to CoinDesk