Bitcoin Price Linked to Binance vs Coinbase Battle, Quant Discovers
A quantitative analyst has revealed that there is a correlation between the Bitcoin price and the ongoing battle for spot volume dominance between Binance and Coinbase. In a recent CryptoQuant Quicktake post, the analyst delved into the dynamics of the cryptocurrency market and how it is affected by the competition between these two exchanges.
The data shows that Binance has consistently had higher spot volume compared to Coinbase, with Binance hosting five times more volume. The analyst even suggests that this difference would be even more significant if the BTC-FDUSD pair was taken into account.
Despite its lower spot volume, Coinbase still holds relevance in the market. The platform serves as the custodian for Bitcoin spot exchange-traded funds (ETFs) such as BlackRock’s IBIT and Grayscale’s GBTC.
However, the interesting aspect emerges when examining the correlation between the dominance of the American exchange and the Bitcoin spot price. The analyst has noticed a recurring pattern where a surge in Coinbase’s spot trading volume relative to Binance has preceded increases in the cryptocurrency’s value. Conversely, declines in Coinbase’s dominance have led to drawdowns in the Bitcoin price.
The analyst further analyzes the volumes of both exchanges using the spot volume ratio. The chart reveals that the ratio between Binance and Coinbase reached extremely high levels in 2023, with Binance’s volume being 53 times greater. This spike in ratio resulted from Binance’s introduction of a zero-fee scheme for Bitcoin trading pairs. However, Coinbase’s volume has recently increased, although the ratio remains heavily in favor of Binance. This market shift coincided with the growing intensity of news surrounding Bitcoin spot ETFs.
It appears that the competition between Binance and Coinbase, as reflected in their spot volume dominance, plays a role in impacting the Bitcoin price. Traders and investors should closely monitor the performance and market positioning of these exchanges for insights into potential shifts in the cryptocurrency’s value.