Based on the recent findings from CCData, a cryptocurrency data provider, it has been observed that Binance’s spot market share has experienced a significant decrease. Their market share dropped to 34.3% in September, marking a decline from the 38.5% they held in August. The world’s leading cryptocurrency exchange has experienced a decline in spot market share for the seventh consecutive month.
The decline in Binance’s market dominance extends beyond just the spot market, as the exchange has also experienced a decrease in its position within the derivatives sector.
In the meantime, other platforms such as HTX (previously known as Huobi), Bybit, and DigiFinex have been experiencing an increase in spot trading volume, resulting in Binance losing its market share.
The Diminishment of Binance’s Numbers
According to information obtained from CCData, it is evident that the decline in Binance’s spot share of the market is not an isolated incident but rather a significant trend that is unfolding. As of January 2023, the company’s spot market dominance reached 55.2%.
In addition to this, Binance has also experienced a concerning decline in trading volumes. Regarding the platform’s trading activity, the 7-day trading volume for Bitcoin (BTC) has observed a significant decrease of 57% since the start of September.
The decrease in trading activity is not limited to Bitcoin alone. Approximately 12,230 BTC, equivalent to $330 million, and roughly 198,200 Ethereum (ETH), amounting to $323 million, have been held back from the platform since the start of August 2023.
According to Jacob Joseph, a data analyst at CCData, he provided:
- Insights into the matter.
- The decline can be attributed to discontinuing of the zero-fee trading promotion for well-liked trading pairs.
- The growing apprehension regarding regulatory scrutiny on the exchange.
According to the analyst, Binance’s spot performance in the market is significantly influenced by the conclusion of promotional activities and the persistent legal challenges it faces.
The Emergence of Alte’s Own Cryptocurrency Exchanges
As the trading volume of Binance declines, other exchanges are emerging to take its place, attracting the trading activity that Binance has relinquished. Platforms such as HTX (previously named Huobi), OKX, and DigiFinex have experienced an increase in their trading volumes during the corresponding timeframe.
Various trading platforms have implemented assertive tactics to attract traders. As an illustration, certain entities have commenced promotional initiatives that entail reduced charges, whereas others have prioritized the augmentation of their assortment of tradeable assets. The availability of these competitive options has rendered them appealing alternatives for individuals seeking trading options that are both cost-effective and diverse.
When it comes to derivatives, these stock exchanges are additionally making progress. Derivatives trading has witnessed a decline in Binance’s market share, while platforms such as OKX, Bybit, and the Bitget company have experienced an increase in popularity. During August, Binance held a dominant market share of 53.5% in the derivatives sector. However, in September, their market share experienced a slight decline, settling at 51.5%.
Binance has faced many legal complications that have further exacerbated its existing problems. Binance, Binance.US, and their CEO, Changpeng Zhao, have been subjected to multiple lawsuits by the United States Securities and Exchange Commission, or SEC, and the United States Commodity Futures Trading Commission (CFTC). The legal actions have unquestionably impacted user confidence and may significantly decrease the exchange’s dominant position in the market.
The Unintended Consequences of Promotional Activities
The absence of fee promotion played a significant role in boosting Binance’s trading volume at the beginning. Nonetheless, the conclusion of this promotional campaign in September 2023 has had a negative effect. Following the conclusion of the promotional period, there was a noticeable decrease in the platform’s portion of spot trading, which dropped from sixty-five percent to 58.8 percent.
After the expiration of the incentive, the 7-day average trade volume for the BTC/TrueUSD trading pair experienced a significant decline of 89%. The decrease in popularity could suggest that people were initially drawn to Binance mainly due to its zero-fee trading feature. However, once this offering was discontinued, they transitioned to alternative platforms.
The decrease in Binance’s market share in the spot market can be attributed to factors such as heightened competition, closer regulatory examination, and potentially an error in its promotional approach. Although offering zero-fee trading can temporarily increase metrics, it may not be a viable long-term approach for maintaining a competitive position, particularly in the face of impending regulatory challenges.