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The significant disparity between the value of Bitcoin in U.S. dollars (BTC/USD) as traded on reputable digital asset exchanges such as Binance and Coinbase, compared to its value on Binance's U.S. platform, has markedly increased this month, prompting concern among cryptocurrency experts and commentators on Twitter.
TradingView's data reveals that by 09:26 UTC on Tuesday, the BTC/USD pair on Binance.US was trading at a premium of almost $650 over both the Coinbase-listed BTC/USD pair and Binance's BTC/USDT pair. This marks a substantial surge from the premium of around $20 observed at the end of April, signaling a widening gap that has raised concerns among cryptocurrency analysts.
@fewseethis, a pseudonymous cryptocurrency analyst on Twitter, suggests that the premium on Binance.US may be due to market makers exiting the exchange in anticipation of potential regulatory crackdowns. Market makers are responsible for adding liquidity to the order book, but their departure can lead to reduced trading activity and wider spreads between buy and sell orders.
Binance.US drew the attention of the U.S. Securities and Exchange Commission (SEC) in February regarding its trading affiliates. A representative from the agency stated in March that Binance.US was operating an unregistered securities exchange in the United States.
"IF there is some sort of gov action against Binance.US incoming AND market makers who usually do business there know about it, THEN it's possible they left and there isn't enough liquidity & possibilities for arbitraging are diminished," @fewseethis tweeted.
Data from Cryptowatch indicates that Binance.US's current order book is heavily tilted towards buy orders (bids), suggesting that there is a dearth of liquidity and a possible exodus of market makers from the exchange. According to Griffin Ardern, a volatility trader at Blofin, this trend is a sign of weak market depth and could be the result of reduced trading activity due to the departure of market makers. This hypothesis is supported by the same data from Cryptowatch.
The order book is imbalanced with pending buy orders (green line) greater than the sell orders.
The chart illustrates the 2.5% market depth on Binance.US, which is the collection of all pending buy and sell orders within 2.5% of the mid-price. The mid-price is the average of the highest bid and the lowest ask/offer prices. In the chart, the green line represents the number of pending buy orders, while the red line represents the sell orders. Notably, the green line appears to be higher than the red line, indicating a higher number of pending buy orders than sell orders at the moment.
"When the liquidity is sufficient, the depth of buy & sell sides is usually constantly changing, but a dynamic balance is maintained. On Binance.US, the order book is imbalanced with significantly more buy orders than sell orders," Ardern told CoinDesk. "For a giant exchange, such a depth chart is undoubtedly abnormal. Prime market makers are leaving Binance.US, possibly due to regulatory pressure and renewed compliance requirements."
Furthermore, Tether, the largest stablecoin globally, experienced a surge to $1.3 on Binance.US on Monday, which deviated from its usual dollar peg. Despite being designed to trade in accordance with the US dollar, the stablecoin maintained a premium price throughout early Tuesday.
Tether surged to nearly $1.3 on Monday, deviating from its 1:1 dollar peg.
The cause of Tether's increase in value remains uncertain. Certain members of the cryptocurrency community attribute the rise of USDT/USD to the premium trading of Binance.US' BTC/USD pair when compared to pairs denominated in Tether.
On the other hand, several other individuals, such as the well-known anonymous trader Byzantine General and Alice, the market maker for the crypto exchange OPNX, contend that the premium is an indication of withdrawal problems with fiat currency at the exchange.
CoinDesk has contacted Binance.US for further clarification on this issue and is currently awaiting a response as of the time of publication.
"This USDT premium should be irrelevant if FIAT withdrawals work properly," Byzantine General tweeted, asking, "Can't people just withdraw from Binance.US." Alice voiced a similar opinion saying, " It has to be (at some threshold) either a secret USD fee or USD withdrawals not working."
Source Coindesk
