As a seasoned analyst with extensive experience in cryptocurrency markets, I find the relationship between Coinbase and Binance’s spot volume dominance and Bitcoin price intriguing. The battle for dominance between these two major players in the crypto market has significant implications for Bitcoin’s price movements.
A quant has shared insights on the apparent correlation between Coinbase’s leading role in Bitcoin trading volumes compared to Binance‘s and the price of Bitcoin.
Bitcoin Has Been Reacting To Binance/Coinbase Volume Changes
An analyst in a recent CryptoQuant Quicktake examined the market’s shifting trends as Binance and Coinbase compete for the highest spot volume in the cryptocurrency sector.
As a researcher, I’d like to share an intriguing chart presented by my colleague, which illustrates the evolving dynamics of this power struggle over the last ten years.
According to the graph, Binance boasts significantly greater spot volume than Coinbase, with Binance’s volume being approximately five times larger.
As a researcher examining this data, I’ve observed an intriguing disparity between the two sets of figures presented in the graph. It’s important to acknowledge that we’re not looking at the BTC-FDUSD pair here, which would significantly amplify the distinction if included in our analysis.
Although Coinbase’s volume in the spot market is significantly smaller, it continues to play a significant role. For instance, the company functions as the custodian for Bitcoin spot Exchange-Traded Funds (ETFs) such as BlackRock’s IBIT and Grayscale’s GBTC.
It’s intriguing how the preeminence of the American exchange seems to correlate with the Bitcoin spot price, as pointed out by the quant in the graph.
In some cases, an increase in the number of trades taking place on Coinbase relative to Binance has been followed by increases in the value of cryptocurrencies. Conversely, decreases in Coinbase’s market share have appeared to be associated with declines in Bitcoin’s price.
The analyst has delved deeper into the changing trends of the two exchanges’ trading volumes. They have employed the use of the spot volume ratio for a clearer comparison between the two, as illustrated in the following data.
In early 2023, the comparison chart revealed a significant surge in Binance’s spot volume relative to Coinbase. Binance’s trading volume reached an astounding 53-fold increase compared to Coinbase. This remarkable difference was primarily driven by Binance’s initiative to offer zero fees for Bitcoin pair trades.
As an analyst, I’ve noticed a significant increase in trading volume at Coinbase lately. Despite this surge, Binance still holds a more prominent position in terms of trading ratio. This market dynamic became apparent with the heightened news surrounding the Bitcoin spot ETF approval process.
The quant concludes:
The dynamics between these exchanges are complex, but the graphs show that each exchange’s dominance at specific times has a direct impact on the price of Bitcoin. It’s a true battle between the market’s biggest players, where competition is constant, and the outcome is reflected in cryptocurrency movements.
BTC Price
At the time of writing, Bitcoin is trading at around $61,800, down 3% over the past week.
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2024-05-15 04:16