Notes 6/25: Binance.US Burger Discount

The kimchi premium of 2018 has become a hamburger discount in 2023 at Binance’s American subsidiary.

Back then, bitcoin’s premium trade at cryptocurrency exchanges in South Korea enabled traders to execute arbitrage strategies using price differences between exchanges in South Korea and those located in other geographies.

In 2023, bitcoin is trading at a discount to its price at Binance.US as compared to its price at other exchanges for the last three days. It was even reported to have hit a high of $138,000 at the same venue earlier.  

As of this writing, bitcoin price is at $30,448.53, according to CoinGecko. At Binance.US, however, the cryptocurrency is changing hands for $29,331.96. The price difference means that traders can purchase bitcoin at Binance.US and make a neat profit by selling it at other exchanges, including at Binance’s unregulated international operations.

Tether Joins The Party

Algorithmic stablecoin Tether has also joined the party in bitcoin price. Its peg has been dangling off its $1.00 price target for the last three days at Binance.US. Right now, it is at $0.9652, although it fell to as low as $0.9550 this morning.

This is another profit opportunity. Traders can exchange their holdings of the coin for $1 and profit from the difference. Binance.US is among the very few locations where the stablecoin can be ‘redeemed’ for US dollars; otherwise, the most convenient route out of Tether is through bitcoin.

A Further Liquidity Crunch?

Mostly the cryptocurrency ecosystem is a make-believe world that cranks out volatile prices and scandals through algorithmic manipulations. The manipulations are manufactured in response to real-world events and situations.

In the current case, the price disparity at Binance.US is a result of its impending exit from American shores. The exchange was charged by US regulators earlier this month and is being deserted by its banking partners.

Binance’s management has counseled traders to convert their tokens to stablecoins for easy portability between exchanges. The fall in Tether’s peg at Binance.US means investors are redeeming the stablecoin at a rapid clip, instead of transferring their tokens to purchase other tokens at other venues. That’s bad news for bitcoin’s already famished liquidity because Tether is bitcoin’s biggest trading partner.

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