Binance BTC-USDT Liquidity Falls 70% after Revoking Zero-fee Trading

• Binance BTC liquidity for BUSD and USDT dropped by almost 70%.
• Conversely, the BTC-TUSD trading pair saw a 250% hike within 24 hours.
• Traders bought and sold over $18.5 billion of crypto Binance in the past 24 hours.

Data from Kaiko, a market intelligence firm, shows that the liquidity for BTC-USDT and BTC-BUSD trading pairs on the most prominent crypto marketplace, Binance, has dropped significantly by almost 70% and 60%, respectively.

On the flip side, the BTC-TUSD trading pair has seen an impressive increase of over 250% in liquidity, going from just 9 Bitcoin to 29 BTC within a 24-hour window. A researcher at the data analytic firm noted that the considerable drop in liquidity was due to Binance’s recent decision to remove its flagship no-fee trading feature for all BTC pairs except BTC/TUSD.

It’s worth noting that the Bitcoin pair zero fees implementation, which Binance launched in July 2022, had helped the exchange capture an additional 20% market share over the past eight months.

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. Medalie continued:

Zero-fee trading is unsustainable in the long run, but in the short run, enabled Binance to gain massive market share. Without zero fees for most BTC pairs, we could expect a short-term drop in market share.

Notably, the market share of zero-fee BTC pairs on Binance hit an all-time high of 61% last week. Nonetheless, according to data from the market tracking portal, CoinMarketCap, Binance maintains its position as the leader of the crypto spot market.

In the last 24 hours, crypto traders bought and sold over $18.5 billion of cryptocurrencies on Binance. Interestingly, Binance led the closest exchange to it on the ranking by a margin of over $13 billion.