According to the latest K33 research report, Bitcoin and Ethereum have shown strong dependence over the past week following the US Department of Justice’s settlement with cryptocurrency exchange Binance on November 21.
The Justice Department on Tuesday settled a criminal case against Binance that investigated allegations of money laundering, fraud, and sanctions violations. The cryptocurrency exchange will pay a $4.3 billion fine, one of the largest corporate settlements in U.S. history.
Amid comparisons to the downfall of FTX, he said, “Binance can no longer operate because it operates illegally in the United States, but this settlement has nothing to do with mishandling customer funds, so it will not be contagious.” Senior Analyst Vetle Lunde and Vice President Anders Helseth said:
The news had little impact on the markets, with Bitcoin and Ethereum ending the week with flat returns, but altcoins fell slightly and Binance’s BNB token took a big hit, falling 10%, analysts said. pointed out.
Top 3 market capitalization performers. Image: K33 Research.
Bitcoin is currently trading at $37,857 and Ethereum is trading at $2,038, up about 6% and 5% respectively since November 21 as the market absorbs the implications of the agreement. BNB is currently trading at $228, down nearly 14% since November 21, according to The Block price data.
Conversely, Uniswap’s UNI token has risen about 20% over the past week, thanks to its platform being a decentralized exchange as opposed to a centralized one like Binance, the analysts added.
Binance ‘will not disappear’
Despite Binance’s decline in market share this year and a $4.3 billion fine followed by more than $1 billion in outflows recorded in 24 hours, Binance is not going away anytime soon, Lunde and Helseth argued.
Binance’s market share on non-USD exchanges has fallen from about 70% at the start of the year to below 45% this month due to regulatory pressure, according to The Block’s data dashboard.
Analysts added that a similar picture was painted in the derivatives market in 2023, with Binance seeing its market share decline from 32% to 26% throughout the year.
YTD changes in open interest (BTC futures and perpetual contracts). Image: K33 Research.
“Nevertheless, Binance’s strong user base suggests that Binance will remain a cornerstone of the cryptocurrency market structure in 2024,” Lunde and Helseth said. Binance remains the largest cryptocurrency exchange by trading volume.
Signs of profit taking due to significant long-term exposure to CME
K33 analysts said institutional traders on the Chicago Mercantile Exchange are maintaining significant long exposure this week, with Bitcoin exposure and premiums to Bitcoin and Ethereum approaching all-time highs.
Analysts added that CME’s BTC futures have only traded at a larger premium three times, twice during the 2020-2021 bull market and once ahead of the coronavirus crisis. Premium is the difference between the spot price and the futures price of an asset.
CME Bitcoin Open Interest and Premium. Image: K33 Research.
But premiums have also eased significantly, with open interest down 6% by Monday, meaning one or two large traders are taking profits, Lunde and Helseth said.
Analysts added that cryptocurrency derivatives traders in offshore markets also do not show a clear directional trend, with funding ratios remaining neutral and open interest stable at relatively low levels.
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