Bitcoin Trading at a Premium on Binance.US, Arbitrage opportunity?
Bitcoin has been trading at a premium on Binance.US for four consecutive days, with traders speculating on the cause of the discrepancy, which could be due to market makers leaving the platform or a demand issue on an illiquid exchange
Bitcoin has been trading at a premium on Binance's US exchange for four consecutive days, presenting a unique arbitrage opportunity for traders. The price difference between Binance's global exchange and Binance.US indicates a $700 premium for one Bitcoin, representing approximately 2.5% of its value.
Traders can usually make a profit from the difference in Bitcoin price between Binance.US and other exchanges by buying at a discount and selling at a premium. However, this particular case might not be as easy to arbitrage.
Some traders have speculated that the price discrepancy could be due to the departure of market makers from Binance.US, leading to reduced liquidity and price imbalances. Market makers are institutional traders who provide liquidity on exchanges by creating buy and sell orders for a cryptocurrency using their own capital to make a profit.
However, one Twitter user, @_FabianHD, noted that there is no indication that market makers are leaving Binance.US. He said that orderbook depth hasn't widened significantly compared to other markets, and total assets have remained steady throughout the month. Conor Ryder from Kaiko Data also agreed, citing "no change in liquidity" and suggesting that the premium could be due to a Bitcoin demand issue on an illiquid exchange struggling on the USD side.
Another Twitter user, @fewseethis, speculated that the premium could be due to incoming regulatory action against Binance.US, which might have spooked market makers off the platform.
Binance and Binance.US are separate platforms that cater to America's unique regulatory environment and offer different cryptocurrencies for trade. The premium on Binance.US appeared on Saturday morning and has remained ever since, impacting funding rates on other exchanges such as Bitmex.
In conclusion, the Bitcoin premium on Binance.US is presenting an arbitrage opportunity for traders, but the reason behind it remains unclear. While some traders speculate that market makers leaving the platform could be the cause, others suggest that it could be due to a Bitcoin demand issue on an illiquid exchange. Alternatively, the premium could be due to incoming regulatory action against Binance.US, scaring market makers off the platform.
