Why Binance.US Offers Higher Bitcoin Price For Traders?

Key Points:

• Bitcoin is trading at a $700 premium on Binance.US, offering an arbitrage opportunity for traders.
• One Bitcoin costs $28,300 on Binance.US, indicating a 2.5% premium compared to global markets.
• Analysts disagree on the cause of the unusual length of the premium, with theories ranging from market makers leaving to a BTC demand issue on an illiquid exchange.

Bitcoin has been trading at a $700 premium on Binance‘s US exchange for four days, which has caught the attention of many traders and analysts alike.

While some attribute the price difference to the departure of market makers, others suggest that it may be due to pending regulatory action. Regardless of the cause, the unusual length of this premium has led to speculation and has impacted funding rates on other exchanges.

To provide some context, the price of one bitcoin is currently $28,000 on global markets, such as Binance’s global exchange. However, on Binance.US, one bitcoin costs $28,300, indicating a $700 premium. This excess cost represents about 2.5% of the bitcoin’s value, which is not a negligible amount.

As traders try to profit from the difference in Bitcoin price between Binance.US and other exchanges, one Twitter user, @fewseethis, speculated that news of incoming regulatory action could have spooked market makers off. “IF there is some sort of gov action against Binance US incoming AND market makers who usually do business there know about it THEN it’s possible they left and there isn’t enough liquidity & possibilities for arbitraging are diminished.” However, the departure of market makers is not the only possible explanation.

Another analyst, @_FabianHD, believes that the departure of market makers doesn’t explain the phenomenon, stating that “there doesn’t seem to be any strong indication that [market makers] are leaving,” and that “total assets have been steady throughout the month.” Conor Ryder from Kaiko Data agrees, citing “no change in liquidity.” He suggests that it’s more likely that the premium is due to a BTC demand issue on an illiquid exchange struggling on the USD side.

Whatever the reason may be, this premium has lasted for four days, which is unusual in itself. This price difference has been impacting funding rates on other exchanges, including Bitmex. It’s important for traders to take note of this premium and keep an eye on any further developments that may impact the Bitcoin market.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

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