Binance.US has experienced a significant decline in liquidity following the recent legal actions taken by the U.S. Securities and Exchange Commission (SEC). A report by the research firm Kaiko reveals that the market depth, a measure of liquidity, has plummeted by 76% for 17 top tokens on Binance.US since the SEC filed a lawsuit on June 5th.
Prior to the lawsuit, on June 4th, the market liquidity of Binance.US stood at $34 million. However, by June 12th, it had dwindled to a mere $7 million. This steep decline in liquidity indicates the negative impact of the legal proceedings on the exchange’s trading activities. Similarly, Binance’s global operations have also experienced a 7% decrease since the beginning of June.
Additionally, Binance.US has witnessed a significant loss in its market share, dropping from 20% in April 2023 to a mere 4.8%. The Kaiko report sheds light on the initial stability and even slight increase in market depth on Binance following the lawsuit. However, the weekend saw a decline due to altcoin market sell-offs.
It is worth noting that Binance is not the only exchange to suffer a decrease in liquidity. Coinbase, the prominent U.S. exchange, which also faced regulatory scrutiny from the SEC in the previous week, saw a 16% decline in liquidity during the same period.
The reasons behind these liquidity declines for both exchanges are understandable, stemming from traders’ pessimistic sentiment leading them to withdraw liquidity to avoid a repeat of the asset lock-up situation experienced by FTX last November.
Furthermore, the report highlights an interesting detail regarding market share. While Binance.US has seen a decrease to 4.8% in June, Coinbase’s market share has increased from 46% to 64% in the past week, for reasons yet to be determined, according to Kaiko.
These recent developments illustrate the far-reaching consequences of regulatory actions on cryptocurrency exchanges. The decline in liquidity for Binance.US and other exchanges underscores the impact of legal proceedings on investor confidence and trading activities.
Read more:
- Binance US Shifts To Crypto-Only Exchange Amid Regulatory Challenges And Banking Disruptions
- Binance In Crisis: $2 Billion Outflow Of Funds Amidst SEC Lawsuit