The team at Kaiko research is out with some curious data that contradicts recent news about crypto liquidity. Trading volumes reached a four-month high for the overall cryptocurrency ecosystem in March even as major exchanges witnessed a steep decline in their market share, the research firm wrote in a post.
Binance, the world’s biggest cryptocurrency exchange by trading volume, has lost the most market in the last two weeks, according to Kaiko. It witnessed a 16% decline, to 54%, in its share because it ended a zero-fee policy for stablecoin trading pairs introduced last year. Coinbase, another top exchange, has lost 10% of the overall share of the U.S. market because it received a regulatory notice.
New Exchanges to Pump Crypto Prices
Who is picking up the slack?
Investors are gravitating towards Binance.US, a subsidiary of Binance, from other American exchanges, writes Kraken. It tripled its market share from 8% to 24% in the first quarter of 2023.
The defection by investors to Binance.US is a puzzling development. While it was not named in the CFTC lawsuit against its parent entity, Binance.US is not without its share of controversies. It is also reported to be a ruse to distract regulators from the main exchange’s shenanigans. The exchange shares market makers with its parent firm. Those companies are already under investigation by regulators.
Another contributor to the rise in volumes in the last two weeks is Upbit, a South Korean exchange that accounted for the highest wash trading…err…trading volumes for Ripple’s worthless token XRP. The profit taking in XRP occurred last week with the usual pump…sorry…pomp and recycled narratives of crypto disruption that accompany such events.
Fewer Traders
Earlier, Kaiko reported a ten-month low in liquidity for crypto markets in March, meaning there were fewer traders putting their money into crypto. That piece of news corroborates with data points from other entities that indicate dwindling interest among institutional firms.
The jump in trading volumes at exchanges means that fewer players are making many more trades amongst themselves to inflate token prices. Or, wash trading, a frequent occurrence in crypto markets, has become rampant. Either or both of those things will blow up Bitcoin price. And not in a good way.