There is an important development regarding Binance, one of the leading cryptocurrency exchanges. Accordingly, there is a sharp decrease in the seven-day average Bitcoin spot volume. It has fallen by 57% since September 1. Crypto research firm K33 Research published a report. Accordingly, this significant decrease in trading activities on Binance is noteworthy. Accordingly, it contributed to a 48% decline in trading volumes on various exchanges.
Regulatory pressure and market impact for Binance
K33 Research suggests that Binance exchange’s ongoing legal battle with the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) may be deterring market makers from engaging in trading activities on the platform. This decline in activity on the Binance exchange cast a shadow over the entire cryptocurrency market. It’s a different situation at rival exchange Coinbase, which is also facing legal action from the SEC. Accordingly, in the same period, bitcoin recorded a 9% increase in spot transaction volume.
Despite the overall decline in trading volumes for Binance, Bitcoin is showing resilience. Accordingly, it led a spot-focused rally. Last week, the price of Bitcoin increased by 8%, reaching a three-week high. Additionally, Ethereum and Binance Coin (BNB) also recorded gains of 6% during this period. TON Coin took significant steps, posting a significant increase of 45% in just seven days. Accordingly, it entered the top 10 cryptocurrencies by market value.
Mixed emotions in the derivatives market
Making a statement about Binance, K33 Research analysts Vetle Lunde and Anders Helseth look at important points on this issue. Accordingly, they underscore the mixed feelings among institutional investors. They noted an increasingly bullish sentiment among derivatives traders on the Chicago Mercantile Exchange (CME). Bitcoin open interest on CME increased by 19% last week. This was also accompanied by rising futures premiums.
However, the derivatives market is not completely bullish. CME’s Ethereum open interest decreased by 17% during the same period. Additionally, ETH futures continued their relative premium reduction relative to Bitcoin. This suggests that speculators are less enthusiastic about an Ethereum ETF and its potential market impact.
Crypto-specific events drive the market
In addition to the statement about Binance, there is a significant change from previous trends in cryptos. Accordingly, it is a fact that the direction of the crypto market in 2023 is primarily affected by crypto-specific events. Short-term squeezes, ETF-related news and bankruptcy news attract attention. There are also sell-side pressures from government institutions. This transformation is evident in bitcoin’s divergence from traditional indices such as the S&P 500 and DXY, which have been closely correlated in the past.
As the US Federal Reserve announces its latest interest rate decision, K33 Research analysts expect any impact on crypto markets to be short-lived. On the other hand, there is a decrease in the correlation between cryptocurrencies and traditional markets. Accordingly, when we look at it as Kriptokoin.com, it makes macroeconomic data less relevant to current trading decisions. However, future developments regarding Binance will attract more attention.
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