Binance's Bitcoin Trading Volume Hits Lowest Level in 8 Months Following Termination of Zero-Fee Trading

Binance, the world’s largest crypto exchange by trading volume, recorded its lowest bitcoin (BTC) trading volume on Sunday since July 4, 2022, according to data from Kaiko.

Volume for 13 trading pairs, which once accounted for roughly half of the exchange’s volume, has dropped to about 30%. The exchange’s global market share, which peaked at over 70%, has dropped to about 58%.

Average volumes of the BTC-USDT trading pair have plummeted 90%, Kaiko noted.

The declines come after the exchange halted its no-fee trading promotion for the 13 bitcoin spot trading pairs, including BTC-USDT, on March 22. Binance called the promotion temporary. In an email to CoinDesk last week, Clara Medalie, research director at Kaiko, wrote that without zero-fee, she expected “a short-term drop in market share.”

Binance’s zero-fee trading promotion on July 8 increased volume for both tether USD (USDT) and binance USD (BUSD) and helped Binance increase its market share to 72% from 50%, according to Kaiko research analyst Riyad Carey.

As of mid-March, zero-fee trade volume accounted for 66% of Binance’s trading volume.

Binance phased out zero-fee trading last week, with the exception of the trueUSD (TUSD) stablecoin. “It is unclear why Binance has chosen to promote its TUSD pair, although it appears the exchange has selected the stablecoin as a successor to BUSD, which is being phased out because of regulatory actions in the U.S,” the report from Kaiko said.

Before zero fees started, Binance’s trading market share for the 13 BTC pairs was just 25% before more than doubling. “It has now been just 5 days since fees were reinstated, and market share has halved and is currently below 30%,” Kaiko said.

Binance’s global market share is down 10% since last week. The exchange suffered a two hour outage last week, the result of a computer bug that forced it to suspend spot market trading and could have contributed to the drop.

In recent weeks, Binance has also endured increased regulatory scrutiny. On Monday, the U.S. Commodity Futures Trading Commission sued the exchange and founder Changpeng Zhao on allegations the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law.

Read More: CFTC Sues Binance, CZ Over 'Willful Evasion' of U.S. Laws, Unregistered Crypto Derivatives Products

Market share of tether-USD on the exchange has dropped from 81% to 68%, but TUSD volumes have had a small increase, climbing to $5 million. The BTC-TUSD pair, however, accounts for only 2.8% of the exchange's total volume.