Binance, one of the world’s leading centralized cryptocurrency exchanges, has seen its dominance wane over the past year, according to a report by blockchain analytics firm 0xScope. The report highlights that Binance’s trading volume and market indicators have declined, with competition from other exchanges intensifying.
Binance’s eroding dominance
The report suggests that Binance’s trading volume and overall market indicators have declined by approximately 10% over the past year. While it still maintains a prominent position in the global crypto exchange market, accounting for 51.2% of the Centralized Exchange (CEX) volume share between October 2022 and October 2023, its dominance has been on a steady decline. In October 2022, Binance’s market share stood at 54.6%, but it has since dropped to around 45%.
In contrast, OKX, one of the “second-tier exchanges,” has seen a significant surge in its market share. Its volume share has risen from 10.5% in the previous year to 16.1% in the most recent recorded week, solidifying its position as the second-largest exchange in the crypto market. Other exchanges like Bybit, Bitget, and MEXC have also experienced healthy growth trends during the past year.
Spot market decline and Binance’s listing strategy
Binance’s dominance in the spot market has been notably affected, dropping from 62% to 40% over the course of a year. This decline is attributed in part to Binance’s listing strategy, as many popular coins listed on the platform experienced immediate declines in value. In contrast, Upbit and Coinbase, both excluded from the rankings due to their lack of derivatives trading volume, have risen in the spot market. Upbit’s market share improved remarkably from 5% to 15% within a year.
While Binance’s spot market dominance faced challenges, its derivatives volume remained relatively stable, decreasing from 50% earlier in the year to 45% in recent weeks. Over the same period, OKX’s volume share increased from 10% to 15%.
Legal challenges for Binance
Binance has also been embroiled in legal challenges, including a lawsuit from the U.S. Securities and Exchange Commission (SEC) in June. The SEC’s allegations range from mismanagement of client funds to listing multiple unregistered securities, which has undoubtedly added pressure to the exchange.
When looking at the value of crypto assets held by exchanges, Binance still holds the largest share at 45%, although this represents a decrease from 50% the previous year. Its closest competitors in this regard are Coinbase and Bitfinex. Notably, Bitfinex maintains a close relationship with Tether, which holds $85 billion in reserves.
Additionally, analyzing deposit addresses opened at each exchange reveals that both Binance and Coinbase hold approximately 30% each. However, Binance’s share increases to 40% when considering only active addresses.
