In the latest report by Kaiko for Q1 2023, it has been revealed that Binance’s decision to end zero-fee trading triggered an instant drop in trade volume for all BTC pairs. The report stated that on March 22, Binance halted its no-fee trading promotion for 13 BTC spot trading pairs, including BTCUSDT and BTC-BUSD, which had helped boost the exchange’s market share by more than 20%. A recent tweet from Cryptoquant sheds light on the situation:

Notably, the data suggests that most of Binance‘s total trade volume, which was free of any fees, peaked at 66% in mid-March 2023. However, within five days of reinstating fees, the market share of these 13 pairs was reduced to less than 30%.

The report also pointed out that the liquidity of cryptocurrencies experienced a decline after the banking crisis, with Bitcoin’s market depth reaching its lowest point in 10 months. Low liquidity levels could increase price volatility as the support for prices on upward and downward movements weakens.

According to the report, using 2% market depth in BTC as a metric for market liquidity, the industry is currently at its lowest levels in ten months, even lower than the aftermath of FTX. The absence of one of the industry’s largest market makers has created an Alameda Gap, and with the banking issues of late.

Significantly, the report noted that the $ARB airdrop boosted Layer 2 projects but was met with controversy. The Ethereum layer 2 network finally announced its airdrop of ARB tokens for users and protocols on the network, with smaller market cap tokens surging. 

GMX and Treasure DAO received the highest allocations of 8 million ARB each, while Camelot DEX and Radiant Capital received 2.1 million and 3.3 million tokens, respectively. However, the airdrop sparked controversy, with some arguing that it favoured certain protocols over others.

These three major developments have shaken up the crypto world, with Binance’s decision to end zero-fee trading significantly impacting trade volumes. The drop in liquidity due to the banking collapse has also created a challenging environment for traders, with higher volatility expected. The ARB airdrop brought some positive news for Layer 2 projects, but its distribution has sparked debate.