Binance, one of the largest cryptocurrency exchanges, has seen a significant decrease in its market share, reaching its lowest level in four years. According to data from CCData, Binance’s combined market share in spot and derivatives trading dropped to 36.6%, the lowest since September 2020.
The decline in Binance’s market share can be attributed to a decrease in both spot and derivatives trading volumes. Spot trading volume fell by nearly 23% from August, resulting in a market share of 27%, the lowest since January 2021. Similarly, derivatives trading volume declined by 21%, with Binance’s market share among centralized exchanges dropping to 40.7%, the lowest level since September 2020.
While Binance’s market share has been on the decline, other exchanges like Crypto.com have seen growth in their trading volumes. Crypto.com experienced a more than 40% increase in spot and derivatives trading volume on a month-to-month basis. Year-to-date, the exchange has seen the largest gain in spot trading, increasing its market share to 10.5%.
Overall, trading activity on crypto exchanges decreased last month, with both derivatives and spot trading volumes falling by 17%. However, analysts expect trading activity to pick up in the last quarter of the year, driven by factors such as increased market liquidity following the Federal Reserve’s interest rate cut and the upcoming U.S. election.
Binance’s diminishing dominance in the market comes at a time when the exchange is facing increased regulatory scrutiny. Last month, the U.S. Securities and Exchange Commission (SEC) filed a proposed amended complaint against Binance, focusing on the exchange’s token listing practices. This followed a lawsuit in June 2023, where Binance was accused of operating as an unregistered broker, clearinghouse, and trading venue, and offering unregistered securities. As part of a settlement, Binance agreed to pay a $4.3 billion fine to various U.S. regulators.
The founder and former CEO of Binance, Changpeng “CZ” Zhao, also faced legal issues, pleading guilty to violating the Bank Secrecy Act by not implementing adequate know-your-customer (KYC) systems at the exchange. He was sentenced to four months in prison but was released last week.
In conclusion, as Binance’s market share hits a four-year low, the exchange faces challenges both in terms of market competition and regulatory scrutiny. It remains to be seen how Binance will navigate these challenges and regain its position in the cryptocurrency market.