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Binance Sees Enormous Volume Drop: What’s Happening?

Tue, 28/05/2024 – 9:50

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According to a CoinGlass report, Binance sees a substantial drop in trading volume, which is currently tied to trading bots that are used for stabilizing the market and liquidity. As for now, major assets are losing from 70% up to 95% of their volume, but it is not yet clear what the reason is behind the drop.

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The report goes further to indicate that Binance currently experiences huge declines in trading volumes related to inter-trading bots that are used for market stabilization and providing the necessary liquidity. At the moment, the main assets are losing from 70% up to 95% of their volume, yet it is unclear why this volume dropped.

The drop is huge, amount-wise. On some, it is steep. For example, Pepe was down by over 97.5%, Bitcoin was down by 62% and Solana plunged by 88.9%. Obviously, it might create some issues with liquidity, if CoinGlass’s report is correct.

One of the potential reasons for this to unexpectedly happen is a failure of the trading bots that keep the market’s liquidity balanced. They are widely used by traders with a number of functions: arbitrage, market-making and provision of liquidity. 

If some critical bot goes offline, it removes a substantial part of trading activity in a tick, causing a sudden fall in transaction volume. Such bots are used nearly on nearly every centralized exchange and are an integral part of a smooth user experience in trading.

There can be many reasons for bots going offline — it may be a technical glitch, update or maintenance work going on at the platform; changes in the policy or restrictions of APIs by Binance may be another reason. Therefore, in this sense, the bots are going to be stopped sometimes as a consequence of changing policies or restrictions being imposed by Binance over APIs.  

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