Binance Bitcoin Trading Volume Falls To Pre-Fee Removal Lows

Posted on January 4, 2023
News
By Mark Otto
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Data shows the Bitcoin trading volume on Binance has now fallen to lows not observed since before the fee was removed. Bitcoin 7-Day Average Trading Volume On Binance Continues Decline As per the latest weekly report from Arcane Research, the market has observed a significant drop in activity recently. The “daily trading volume” is an […][...]

Data shows the Bitcoin trading volume on Binance has now fallen to lows not observed since before the fee was removed.

Bitcoin 7-Day Average Trading Volume On Binance Continues Decline

As per the latest weekly report from Arcane Research, the market has observed a significant drop in activity recently. The “daily trading volume” is an indicator that measures the total amount of Bitcoin that was transacted on any spot exchange on a given day.

Arcane Research’s general spot market trading volume metric is based on the total transfers on the Bitwise 10 exchanges. While these exchanges don’t cover the entire market, their volume data is the most reliable available out of all the exchanges, and activity on them still serves as a decent approximation for the market-wide trend.

When the trading volume on these exchanges is high, it means a large number of coins are currently being shifted in the spot market. Such a trend suggests traders are active right now. On the other hand, low values imply BTC activity is low at the moment as investors are making little moves on spot exchanges.

Now, here is a chart that shows the trend in the 7-day average Bitcoin trading volume for Binance and that of the rest of the Bitwise 10 exchanges separately:

Bitcoin Trading Volume

The reason why the Binance spot volume is shown separately from the other exchanges is that the platform adopted a zero-fee policy for its BTC pairs last summer, which led to explosive growth in its volumes, and the exchange soon far outweighed the entire rest of the market combined.

However, a lot of this increase in volume was likely due to wash trades, as no fees meant that high-volume trading strategies were now viable. Still, there was obviously some organic improvement in activity as well, since some investors would have left other exchanges in favor of Binance following the change.

As you can see in the graph, the trading volume on Binance hit a peak around November of last year but has since been going down. Most recently, the indicator has hit the lowest values since the crypto exchange removed its fees.

There is also very little activity in the rest of the market at the moment as their combined volume remains at pretty low levels. The report notes that this market-wide slump in participation could in part be due to the Holiday season.