The divergence between the price of Bitcoin (BTC/USD) on major digital asset exchanges such as Binance and Coinbase and the price on Binance’s U.S. division has increased significantly this month, generating concern among crypto experts on Twitter. As of 09:26 UTC Tuesday, Binance.US’s BTC/USD pair traded at a nearly $650 premium over its Coinbase-equivalent and Binance’s bitcoin-tether pair (BTC/USDT) – a notable jump from the $20 premium observed at the end of April, according to data from charting platform TradingView.
Pseudonymous Twitter-based analyst @fewseethis suggests that the premium on Binance.US is likely due to market makers exiting the exchange in preparation for potential regulatory action. Market makers are responsible for maintaining liquidity in the order book. In February, the U.S. Securities and Exchange Commission (SEC) began scrutinizing Binance.US over its trading affiliates, and in March, one official stated that Binance.US was operating an unregistered securities exchange in the country.
This possibility of government action against Binance.US and the potential knowledge among market makers could explain their departure and the subsequent decline in liquidity and arbitrage opportunities. At the time of writing, Binance.US’s order book exhibited a bias towards bids – buy orders – as reported by data from Cryptowatch. This apparent lack of market depth and exit of market makers could be attributed to regulatory pressure and increased compliance requirements, as suggested by Griffin Ardern, a volatility trader at crypto asset management firm Blofin.
Furthermore, controversy arose on Monday as tether, the world’s largest stablecoin, spiked to $1.3 on Binance.US, deviating from its dollar peg. The cause of this appreciation remains uncertain, with the crypto community divided over whether USDT/USD’s surge was responsible for Binance.US’s BTC/USD pair trading at a premium compared to tether-denominated pairs or whether it indicated fiat withdrawal issues at the exchange.
Pseudonymous trader Byzantine General and crypto exchange OPNX’s market maker Alice both propose that the premium could signal withdrawal problems. CoinDesk reached out to Binance.US for comment on the matter but had yet to receive a response. While the future of Binance.US and its relationship to regulation remains unresolved, this recent price disparity serves as a reminder that the crypto market is complex and can be influenced by a variety of factors.