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As one of the fastest growing industries in the world, the cryptocurrency sector has gained a lot of popularity in the last couple of years. This sudden development It was thanks to the bull market in 2021, which not only created a large community for the sector, but also saw a significant increase in the value of many projects.
While blockchain may still be in its infancy as a common sector, it still positions itself as an asset class with a lot of potential. This infact can be seen more clearly now, some countries have even moved to legalize BTC, the front runner cryptocurrency as legal tender.
However, things have been very difficult for the citizen investor for the past couple of months. Signs of a market crash in the industry and related assets have been hit hard in both price and participation. Projects and ecosystems that generate millions of dollars in daily transactions are facing liquidity problems due to reduced interest and participation from investors.
With all this, there were certainly some winners and losers. While countless firms struggle to stay afloat and avoid bankruptcy, some are enjoying the fortunes of the bull run, which have now allowed them to build infrastructure relentlessly.
Companies like Coinbase have had to lay off staff to cut costs, while major projects like Celsius have faced severe liquidity problems. Overall, it was a boon for some firms that had previously done exceptionally well. The sudden market crash not only lowered the value of cryptocurrencies but also affected major companies.
Investors also do not have a clear understanding of where the markets will move in the coming days and have been hesitant to stop their money soon. Although this was not the case among the few winners mentioned above.
Exchanges and their main role in the industry
As a new sector, investors’ involvement in cryptocurrencies should still be mainstream. In fact, one study revealed that over 98% of people don’t even understand the basics of these digital assets. As a result, the only direct exposure investors have as part of the blockchain industry is the exchange.
Although the knowledge that they are potential assets can be found in the main media platforms, these masses can really be part of the industry only through the cryptocurrency exchange. Therefore, exchanges play an important role in the sector and influence the price movements of cryptocurrencies at the main level.
One such major exchange that has historically been a large part of the blockchain industry is Binance. As one of the largest exchanges in the world, developments or actions in its platform are scrutinized by investors and financial analysts. One example was recorded recently, where the exchange was independently against the trend of the volume.
Binance trading volume is bucking the trend
Trading is an excellent indicator of an extended bear market. When traders take advantage of volatility during the first dip, trading volume increases. Simply put, trading volume is the total number of shares of a security traded in a given period of time. Investors often use trading volume to confirm the presence or continuation of a trend or a trend reversal. It generally signals investors to enter the market.
Looking at the combined volume for BTC and ETH pairs on 14 major exchanges, it is worth noting that there are no rising trades. However, often, such aggregated data can be a bit misleading. When distinguishing Binance from other exchanges, it can be noted that there is a strong disparity between the 13 other exchanges and the above.
This excess volume in Binance may be due in part to the elimination of fees on the BTC/ETH pair earlier this year. Therefore, if you consider only the amount sold on Binance, it suggests that the market may be in another crash. This high demand sets Binance apart from the competition due to the fact that there is no transaction fee feature, which unfortunately many smaller exchanges cannot do.
What is Binance?
Founded in 2017, Binance is the largest exchange in the world, which can be seen from the information above. It was founded by Changpeng Zhao, better known as CZ. The current CEO was a developer who created several high frequency business software.
Originally based in China, the company had to relocate its headquarters following China’s ban on cryptocurrency trading and related activities. It was registered in the Cayman Islands and was already used by more than 28.6 million users in 2021. Binance also has two versions of its exchange offering. One is to provide its customer base in America called Binance US, and the other is a version available for other countries where it operates.
How this might affect the market as a whole.
Several aspects determine future market movements. Although this cannot guarantee the same kind of rapid events in terms of industry value, the statistics show the migration of users from other exchanges to Binance. This simple change can have long-lasting effects.
Considering only the size of Binance, the market will probably see a price drop soon. But the part of the business that goes to a sole proprietorship may be unnatural and cannot be accurately estimated. The kind of growth and trust that Binance has built over the years may be why a large number of investors are flocking to it.
It hasn’t affected the cryptocurrency market as prices still seem to be at levels they’ve been trading at for several months. At the time of writing, BTC, the top cryptocurrency, is trading at around $19,000 with a market value of over $360 billion.
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