Kaiko

Data-Driven Analysis of Cryptocurrency Markets

Crypto

<ul><li>Binance is the world’s largest crypto exchange by a huge margin.</li><li>It has achieved consistent growth since its founding in 2017, but its increasing dominance has been striking to watch since 2020, when it held around 25% of spot volume market share.</li><li>Its market share approached 50% at the tail end of the 2021 bull market before retreating and again expanding to peak over 70% this year. </li></ul>

<ul><li>On March 22, Binance halted its no-fee trading promotion for 13 BTC spot trading pairs, reversing a move that helped boost the exchange’s market share by more than 20% relative to its competitors.</li><li>The exchange also announced that it would be eliminating trading fees for the BTC-TUSD pair, which was mothballed in September and only recently re-listed.</li><li>It is unclear why Binance has chosen to promote its TUSD pair, although it appears the exchange has selected the stablecoin as a successor to BUSD, which is being phased out because of regulatory actions in the U.S. </li></ul>

<ul>
<li>The crypto industry was again shaken this week when news came out that the NY Department of Financial Services (NYDFS) had ordered Paxos to stop issuing BUSD, with an NYDFS spokesperson saying Paxos “violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform.”</li>
<li>Additionally, it was revealed that the Securities and Exchange Commission (SEC) sent a Wells notice to Paxos, informing the company that the SEC is considering legal action against Paxos, alleging that BUSD is a security. (I’ve offered my thoughts on the regulatory aspect of this here.) </li>
<li>We’ve covered BUSD’s growth and market share extensively in previous Data Debriefs, noting that about 35% of Binance volume is denominated in BUSD and it quickly grew to the third largest stablecoin by market cap</li>
</ul>

<ul><li>Price Movements: cbETH, Coinbase's liquid staking derivative, started trading at a discount after news broke that the SEC had fined Kraken $30mn. </li><li>Market Liquidity: LocalBitcoins shut down after 10 years of service after competition and a prolonged bear market sapped trade volume. </li><li>Derivatives: ETH options markets look bullish but more volatile than BTC. </li></ul>

<ul><li>Wash trading was at one point a pervasive problem in cryptocurrency markets.</li><li>Today, most major exchanges have strict anti-wash trading measures, which has drastically reduced the problem since the ICO-led trading boom of 2017-18.</li><li>Yet, due to the relatively low barriers to entry for launching an exchange, this type of market manipulation is far from eradicated on lesser-known, unregulated venues. </li></ul>

United States

BNB was launched in 3rd July 2017 as an ERC-20 Token that enabled holders to get discounted trading fees at Binance Exchange. BNB has evolved over time to also be the native token of its own blockchain. BNB can still be used to pay for discounted Binance services though it is also heavily used as payment for gas when confirming transactions on BNB Chain.

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Binance Coin - XBIUSD CURNCY

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The Unwinding of BUSD

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The End of BUSD

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How to Spot Artificial Volume

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