Binance.US On Life Support: Market Makers Abandon Sinking Ship As Coinbase Steals The Crypto Exchange Throne

In the wake of the U.S. Securities and Exchange Commission's (SEC) lawsuit, Binance.US is experiencing a severe liquidity crunch, as market makers and traders have vacated the cryptocurrency exchange at an alarming rate.

A research report by Kaiko revealed the liquidity on Binance.US gauged through the aggregated market depth for 17 tokens, plunged nearly 80% in just one week.

Liquidity Dives Off A Cliff

On June 4, a day before the SEC lawsuit was filed, the market depth of Binance.US stood at a robust $34 million. However, the latest data reveals that the figure has nose-dived to a meager $7 million.

While Binance.US has borne the brunt, Coinbase Global Inc COIN and Binance's global entity BNB/USD have also not remained unscathed.

Since the onset of June, Coinbase's liquidity dipped by approximately 16%, and Binance Global saw a decline of roughly 7%.

Notably, Binance’s market depth remained resilient initially and even witnessed a surge post the lawsuit but eventually plummeted over the weekend as altcoin markets tumbled.

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Market Makers’ Jitters

The drastic liquidity plunge implies that market makers are apprehensive, seeking to steer clear of losses that could be triggered by volatility.

There is also considerable apprehension about assets potentially being trapped on the exchange, reminiscent of the FTX collapse.

A Stark Contrast In Market Share

Binance.US’s market share paints a telling picture of its woes. In April, the exchange boasted a 20% market share, which has now dwindled to just 4.8%.

In contrast, Coinbase's market share has experienced a remarkable ascension, climbing from 46% to 64% within the past week.

This surge in Coinbase's market share is shrouded in ambiguity as no specific asset has registered an unusual spike in trading volume.

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