Regards, Binance Crypto Liquidity Is Regaining Strength

According to new study from Kaiko, the so-called “Alameda Gap” in cryptocurrency liquidity on centralized exchanges is beginning to narrow owing to Binance.

Early this month, Alameda Research, the hedge fund division of Sam Bankman-since-defunct Fried’s FTX, stopped trading, which resulted in a sharp decline in the depth of the cryptocurrency market. According to a report released by Kaiko on Monday, other market makers did the same, driving liquidity to extremely low levels not seen since early June.

The total amount of BTC within 2% of the mid price rose from 6.8k to 9.1k over the course of the past week, which is encouraging, according to Kaiko experts. Market depth has expanded from $112 million to $150 million in dollars, which shows that market makers are gradually moving funds between exchanges.

Market participants on several exchanges are still afraid of volatility, as evidenced by bid-ask spreads; analysts stated that spreads for BTC-USD pairs “on most exchanges have not yet recovered.”

Analysts caution that the minor increase in liquidity levels may not hold for long. According to last week’s bankruptcy papers, FTX owes a total of $3 billion to its 50 largest creditors. The weekend’s suspension of all trading and withdrawals by the Japanese cryptocurrency exchange Liquid, which FTX purchased in March, raises the possibility of additional spread.

Genesis’ suspension of withdrawals last week fueled rumors that parent business Digital Currency Group would declare bankruptcy. Traders are frightened by the news.

Researchers found that as traders withdrew from the market, “trading volumes on top centralized exchanges more than halved from the week prior, plummeting to $100 [billion].” The highest average weekly drops were recorded by Huobi and Bitfinex, at 82% and 75%, respectively.

Over the last few months, observers noted that Binance’s weekly trade volumes stayed consistently around $80 billion, most likely as a result of its aggressive fee reduction.

According to Kaiko researchers, decentralized exchange tokens are down 16%, outperforming bitcoin somewhat.

Analysts noted that the token of the decentralized derivatives exchange dYdX increased by 18%, indicating that the competition on the derivative markets to fill the void left by FTX is intensifying. “The risk-off shift in sentiment has had a significant impact on DeFi projects, which are down 25%.”