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The liquidity of BTC-USDT and BTC-BUSD trading pairs on Binance has significantly dropped by about 70% and 60%, respectively, according to data provided by Kaiko.
Researchers at Kaiko attribute the decline in liquidity to Binance’s recent decision to eliminate its flagship no-fee trading feature for all BTC pairs except for BTC/TUSD. Meanwhile, the BTC-TUSD trading pair’s liquidity has impressively increased by over 250% in just 24 hours, from 9 Bitcoin to 29 BTC.
Binance BTC-USDT liquidity has dropped by nearly 70% since zero-fee trading was phased out earlier today
BTC-BUSD liquidity has dropped 60% in the same timeframe
BTC-TUSD up over 250% (from just 9 BTC to 29) pic.twitter.com/4Qr39KUIQi
— Riyad Carey (@riyad_carey) March 22, 2023
It’s worth noting that Binance’s implementation of zero fees for Bitcoin pairs, which launched in July 2022, has helped the exchange capture an additional 20% of the market share over the past eight months.
However, Clara Medalie, the research director at Kaiko, observed that Binance quietly wound down BUSD auto-conversion earlier this month and re-listed the TUSD stablecoin after de-listing it last September.
Binance just eliminated most zero-fee #BTC trading.
This is a pretty big deal. Zero fees helped them gain a massive +20% market share since July. pic.twitter.com/nhDqz6sZxH
— Clara Medalie (@Clara_Medalie) March 22, 2023
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Medalie noted that while zero-fee trading is not sustainable in the long run, it enabled Binance to gain significant market share in the short term. She also stated that without zero fees for most BTC pairs, a short-term drop in market share could be expected.
Despite the recent decrease in liquidity, the market share of zero-fee BTC pairs on Binance reached an all-time high of 61% last week. Nevertheless, Binance continues to maintain its position as the leader of the crypto spot market, according to CoinMarketCap.