Binance Tries Negative Fees to Attract Crypto Market Makers

Effort Aims to Bolster Liquidity on Exchange

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Sponsored by   February 4, 2020 Cryptocurrency exchange Binance is adjusting its fee structure to get market makers to add liquidity on its futures platform. Under the revised Binance Futures Market Maker Program, market makers will receive a negative fee for selected trading pairs, according to an official announcement on Monday.  A “market maker” is a user who adds liquidity, or buying and selling limit orders in which the limit price is above or below the current market price, by placing a trade in the order book. A “market taker” is the one who takes liquidity off the market by filling a trade already placed.  Exchanges generally try to enhance liquidity on their platforms by offering makers lower fees compared to those offered to takers while filling an order. Binance, however, has upped the ante by announcing what's effectively a reward for placing market-making trades on select pairs.  Binance hasn’t yet disclosed details relating to the negative fee structure. To join the program, market makers must have 30-day trading volumes in excess of 1,000 BTC on Binance and have "quality market maker strategies," the post says. The exchange will also accept proposals with evidence of similar trading volumes on other platforms.  A weekly performance review will be imposed, based on metrics like market volumes, market-making time, bid/offer spread, total order size and order duration.  Binance's strategy shift comes as competition is heating among crypto-derivatives exchanges. Regulated firms including the Chicago Mercantile Exchange (CME) and Intercontinental Exchange's Bakkt recently started offering bitcoin options after they had offered futures contracts.  Binance futures went live in September 2019, with the firm's figures suggesting they've seen solid growth.  In January, Binance futures volume witnessed an 85 percent month-on-month increase, with $56 billion traded across its perpetual contract markets.    SPONSOR SECTION Nexo is the world’s leading crypto banking institution. With $1B processed, the company aims to maximize the value of digital assets by offering tax-efficient ‘Instant Crypto Credit Lines,’ high-yield ‘Earn Interest’ products and ‘Send & Pay’ features to our 500K+ users across 200 jurisdictions. Learn More   Waning Bull Momentum BTC: Price: $9,100 | Market cap: $169 billion | 24-Hr Volume: $33 billion Trend: Pullback likely Bitcoin has violated the former resistance-turned-support of the Jan. 19 high of $9,188, validating the bullish exhaustion signaled by Monday's doji candle.  The daily chart MACD histogram is now producing smaller bars above the zero line – also a sign of ebbing of bullish momentum.  Further, the 5-day moving average has topped out and is beginning to trend south, indicating a temporary bearish shift in momentum. Additionally, the 4-hour chart RSI has now dropped into bearish territory below 50. The 4-hour chart is also reporting a downside break of the recent price congestion range of $9,200-$9,600. The odds appear stacked in favor of a deeper pullback to the 200-day average, currently located at $8,867. A UTC close lower could cause more sellers to join the market, leading to a deeper slide toward $8,500. That said, the overall trend will remain bullish as long as prices stay above $8,000.  The case for a pullback to the 200-day MA would weaken if the 4-hour chart RSI crosses the descending trendline. The overall trend will remain bullish as long as prices are holding above the higher low of $8,213 created on Han. 24. Read Analysis In this feature of the Markets Daily newsletter, we aggregate news, reports, ideas and tweets relevant to crypto traders and investors. 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