Dollar shortage drives prices down on Binance.US

Binance.US has not received new dollars for several days. This causes the USD price to rise on the platform. Recall that last month, the exchange has lost its banking partners. Because of this scarcity of the US dollar, crypto/fiat pairs are trading almost 8% off.

Blockworks announcing on Twitter that US Dollar prices are rising on Binance US.

Why are US Dollar prices climbing on Binance?

Binance.US users could see that USD prices were on the rise. This is apparently due to a lower liquidity on demand. Indeed, one USD is worth about 0.93 of a dollar-pegged stablecoin like Tether (USDT) or USDC. In other words, to get a USD on Binance.US, you would have to pay 1.078 USDT. This increase was seen around June 20, after fiat deposits and withdrawals closed.

This anomaly is probably confined to the Binance.US exchange since it was not observed at Coinbase. Binance.US lost the partnerships that allowed OTC trading and US dollar withdrawals in early June.

So, if you want to buy for 1 BTC for example with USD, you will have to pay more than the actual price of a bitcoin. These discrepancies are reflected in the Ether (ETH), Cardano (ADA), Polygon (MATIC) and Dogecoin (DOGE) markets.

What will Binance.US do in the face of USD scarcity?

Binance.US’ first intention was to suspend all USD trading pairs pending possible asset freeze requested by the US regulators. The exchange had mentioned it on June 13. To achieve this, all USD balances had to be converted to stablecoins after June 15. Luckily, none of that happened as Binance reached a settlement with the SEC.

Those familiar with trading know that the price difference between Binance.US and other exchanges normally presents arbitrage opportunities. That said, it’s not as easy since you’d have to bring in US dollars, acquired for $1, to sell at a markup on Binance.US. But as said before, the maneuver is currently impossible since users can no longer deposit or withdraw fiat.

Weird prices on Binance.US don’t start this month. In fact, already in May, BTC and ETH were trading at a premium of more than 3% compared to competing platforms. This time again, low liquidity was the cause. Could these irregularities cause more serious problems on Binance.US?

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