Binance played a role in the decline of Bitcoin trading, researcher says

Happy Monday!

August marked the lowest month for spot trading volume since October 2020. CoinShares’ head of research explains why in today’s Snapshot.

Let’s dig in.

How Binance may’ve affected the decline of Bitcoin

Bitcoin is no exception to the marked decline in crypto trading over the past year. The story is a little more complicated than it seems though, according to James Butterfill, head of research at alternative asset manager CoinShares.

Daily trading turnover for Bitcoin averages around $7 billion this year, a significant decline from 2021 and 2022 — when volumes averaged $13.8 billion and $11 billion, respectively.

Trading volumes had been “relatively stable,” Butterfill said, averaging over $10 billion per day each quarter since late 2020. This changed in the second quarter of 2023.

Volumes plummeted and are “reminiscent of the pre-bull run period between 2019 and 2020,” Butterfill wrote.

“It’s evident that Binance played a significant role in the trading volume decline observed in March 2023,” Butterfill said, linking the decline with with the exchange ending its year-long fee-reduction campaign. Binance stopped its no-fee trading promotion on 13 spot Bitcoin trading pairs, which included the Bitcoin and Tether trading pair, on the March 22.

The end of the fee-reduction campaign came around the same time as the US Securities and Exchange Commission started to crack down on crypto in earnest.

“The cumulative impact has been a pronounced decrease in trading volumes compared to previous years.” Butterfill said.

The decline could soon begin to reverse, Butterfll concluded, noting that long-term trends indicate rising volumes, and short-term data “suggests a resurgence is underway.”

Crypto market movers

• Bitcoin was flat over the past day. The leading digital asset by market capitalisation traded at about $25,900.
• Ethereum tracked Bitcoin, flat over the past day as it continued to trade around $1,600. Digital asset investment products tracking Ethereum saw $3.2 million outflows over the past week, according to CoinShares data.
• Polygon’s MATIC gained about 0.5% over the last 24 hours, to trade above $0.54. Investment products tracking Polygon experienced $8.6 million in outflows last week.

What we’re reading

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• Lure of Treasuries behind Circle stablecoin’s $29bn slump — and USDC could fall even further – DL News

Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.