A week back, the SEC sued Binance and its CEO Changpeng Zhao on the grounds of securities law violations. The exchange has also been blamed of mishandling customer funds, and lying to both regulators and investors regarding its operations. Since then, a lot of damage has happened within the ecosystem. Binance’s native crypto, BNB Coin, has dipped 27% in value. In fact, as chalked out in a recent article, short traders continue to bet against it.
Now, according to an analysis by Kaiko, Binance.US’ market depth started dropping right after the lawsuit was filed. In just a week, it has shrunk by around 78%. Simply stated, the market depth is a volume indicator that helps in gauging the level of available liquidity. It takes into account the buy and sell orders’ volume at different prices. Conventionally, a downtrend is not a positive sign, for it points towards liquidity deficiency. In effect, it becomes difficult for traders to execute orders.
In fact, Kaiko pointed out that market makers from Binance.US “vacated instantly” after the lawsuit, contributing to the liquidity evaporation on the exchange. Market makers play a key role in providing the market with liquidity and depth. In turn, they profit from the difference in the bid-ask spread.
Thus, given the current state of affairs, it can be contended that there’s a fairly less number of buy and sell orders on Binance.US, making the situation tricky for traders to execute trades at their sought-after price.
BEP-126 deployed on BNB Chain
Despite the current uncertainty and wobbly macro state of affairs, upgrades seem to on track. The BEP-126 update has just been deployed on-chain. Specifically, this update introduces fast finality, and in turn, will help ensure additional security and transaction reliability. Chalking out the essence of the upgrade, BNB Chain’s official tweet noted,
“While BEP-126 doesn’t directly speed up transactions or reduce fees, it greatly bolsters the security and reliability of the BNBChain ecosystem.“