The removal of some transaction fees on Binance is believed to be the reason why there was an increase in trading volume on Friday that did not affect the price at all. The increase in volume came on the same day as the launch of a zero transaction fee campaign on certain bitcoin (BTC) spot transactions on Binance.
The volume increase can also be seen on the chart of the BTC/USDT pair on the exchange. The chart also shows that the daily closing price is around $21,600 while the opening price is around $21,600:
While the sharp increase in trading volume also caught the attention of traders, Changpeng Zho addressed the comments on Twitter and said that this is due to zero transaction fees and people are trying to reach the VIP level. Zhao has promised to remove things that encourage people to engage in wash trading, such as the possibility of gaining elite status through fee-free Bitcoin transactions.
"Think this is due to zero fees and people trying to gain VIP tiers. We will exclude Btc trading from VIP calculations. Remove all incentives to wash trade. Announcement with details coming shortly."
Binance also confirmed that such incentives will be removed, saying that this is necessary to create a fair trading environment for all users following the launch of zero fee Bitcoin trading.
Binance has nine different tiers on its platform for users, while those who trade high volumes pay lower transaction fees. Most of the crypto exchanges similarly use the volume-based transaction fee structure.
Although the launch of free Bitcoin trading brings with it some difficulties, users seem to be satisfied. When Binance CEO asked if users still wanted free Bitcoin trading in a poll on Twitter, 65.9% of respondents said "yes".
Wash trading is when traders simultaneously sell and re-buy an asset. It's usually done to make the trading volume appear higher on an exchange or other platform than it actually is. Over the years, many crypto exchanges have been suspected of doing wash trading to push their exchanges higher in various volume rankings. It has also been widely used on some exchanges that pay users tokens for trading.