Bitcoin Price Slashed by $3K on Binance.US – Here's What's Happening – Coinpedia Fintech News
Bitcoin’s price on Binance US was reported at $26k, despite the global market value of around $30k.
Michael Gu of Boxmining warned about market makers withdrawing from the US, which could decrease market liquidity.
The departure or downsizing of market makers could increase price volatility, decrease market efficiency, and lead to job losses.
Bitcoin’s trading value on Binance US is reportedly at $26,970, while the prevailing global market value stood at $30,188. This startling discrepancy was pointed out by Michael Gu, a renowned figure in the crypto space and the face of the crypto-centric YouTube channel Boxmining.
The Foreboding Trend
Gu’s assertions are rooted in a trend he identified and warned about, involving market makers withdrawing from the US. These players are pivotal in ensuring a healthy level of liquidity in the market, allowing for smooth trading of coins.
A large-scale departure of these entities could signal decreased confidence in the US market, particularly for hedge funds that have poured substantial investments into specific alternative coins.
Market makers perform the critical task of continuously buying and selling crypto, effectively narrowing the gap between buy and sell orders. This consistent activity fosters market efficiency and enables investors to promptly execute trades.
However, this balance stands on shaky ground as recent reports from Bloomberg suggest that two major US market makers, Jane Street, and Jump Crypto, are contemplating relocating their operations outside the US. Both firms have historically provided liquidity for major crypto exchanges, including Coinbase, Kraken, and Binance US.
The Lurking Regulatory Shadows
The proposed exit of Jane Street and Jump Crypto can be traced back to heightened regulatory scrutiny, especially due to alleged connections to the FTX and Terra Luna Crisis. While neither company plans to abandon the crypto industry entirely, they intend to dial back their operations, specifically in the US.
The regulatory pressure applied by the Securities and Exchange Commission (SEC) has also played a crucial role in this developing scenario. Despite companies like Coinbase, Ripple, and Binance cooperating with the SEC, they still face accusations of selling unregistered securities. This uncertainty and inconsistent regulatory direction have created an environment of confusion and mistrust.
The potential exit or downsizing of market makers from the US market carries significant implications. A marked decrease in market liquidity could lead to an increase in price volatility and a decrease in market efficiency.
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