According to a recent report by cryptocurrency data provider CCData, Binance, the world’s leading cryptocurrency exchange, has experienced a significant decline in spot market share. In August, Binance’s market share stood at 38.5%, but it dropped to 34.3% in September, marking the seventh consecutive month of decreasing market share.
This decline is not limited to the spot market, as Binance has also lost ground in the derivatives sector. Competitors like HTX (formerly Huobi), Bybit, and DigiFinex have been capitalizing on the trading volume that Binance has lost. This data suggests that the decrease in market share is part of a larger trend.
Furthermore, Binance has also experienced a worrisome reduction in trading volumes. The 7-day trading volume for Bitcoin (BTC) on the platform has seen a significant 57% decline since the beginning of September. Not only Bitcoin, but substantial amounts of Ethereum (ETH) have also been withheld from the platform since August 2023.
“The halting of zero-fee trading promotion for popular trading pairs, combined with the concerns around the regulatory scrutiny on the exchange, has contributed to this decline,” said Jacob Joseph, a research analyst at CCData.
Rising regulatory concerns, coupled with the end of zero-fee trading promotions, have played a crucial role in Binance’s market performance. As Binance’s numbers dwindle, alternative exchanges like HTX, OKX, Bybit, Bitget, and DigiFinex have stepped in to capture the trading volume that Binance has lost. These exchanges have implemented aggressive strategies such as lower fees and expanding their range of tradable assets to attract users seeking more cost-effective or diverse trading options.
Influence in Derivatives Trading
Not only in the spot market, but Binance has also faced a reduction in market share in the derivatives sector. In August, Binance held a market share of 53.5%, which fell to 51.5% in September. Competitors like OKX, Bybit, and Bitget have gained market share in derivatives trading.
Legal issues have further exacerbated Binance’s problems. The United States Securities and Exchange Commission (SEC) and the United States Commodity Futures Trading Commission (CFTC) have filed lawsuits against Binance, Binance.US, and Binance CEO Changpeng Zhao. These lawsuits have undoubtedly affected user trust, potentially contributing to the decline of Binance’s market share.
Effects of Ending Zero-Fee Promotion
One of the key factors that initially boosted Binance’s trading volume was its zero-fee promotion. However, the discontinuation of this promotion in September 2023 has had a negative impact. After the promotion ended, Binance’s share of all spot trading dropped from 65% to 58.8%. For example, the 7-day average volume for the BTC/TrueUSD trading pair decreased by 89% after the incentive expired.
This decline suggests that users were attracted to Binance primarily for zero-fee trading, and once that incentive was no longer available, they sought other platforms. It highlights the significance of sustainable strategies for retaining market share, especially in the face of regulatory challenges.
In conclusion, Binance’s decline in market share and trading volumes can be attributed to various factors, including increased competition, regulatory scrutiny, and the impact of promotional strategies. As alternative exchanges capitalize on Binance’s losses, it remains to be seen how Binance will adapt and regain its position in the cryptocurrency market.
