A recent report by Bloomberg reveals that Binance, the largest cryptocurrency exchange in the world by trading volume, is encountering considerable difficulties as its market share continues to dwindle.
As of September, Binance’s share of the trading volume in the approximately $2 trillion digital asset market has decreased to 36.6%, a sharp drop from 42.7% at the beginning of the year, marking its lowest point in four years, according to data from CCData.
Binance Spot and Derivatives Trading at Four-Year Lows
The decline in market share is particularly evident in both spot and derivatives trading. Binance has a 27% share of the spot market, its lowest since January 2021, while its share of derivatives trading sits at 40.7%, which is also a four-year low.
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According to the report, this drop can be linked to the ongoing legal challenges the exchange has faced globally since last year, especially in the US, which have significantly impacted its financial performance and led to changes in its leadership.
The exchange has been under closer scrutiny worldwide after a settlement with the US Department of Justice (DOJ) last year over serious allegations, including violations of sanctions, resulting in a hefty $4 billion fine.
The repercussions of these regulatory actions included the resignation of co-founder and former CEO Changpeng Zhao (CZ), who spent four months in prison as part of the settlement. However, he was released by US authorities last Friday after completing his sentence.
In a move to restore trust and navigate the regulatory landscape, Binance has appointed Richard Teng, a former regulator, as its new CEO. Teng has actively engaged with regulators investigating Binance in various regions and has also established a new board of directors, along with plans to create a new headquarters.
Centralized Crypto Exchanges Experience 17% Volume Decline
The report further emphasizes that the larger sector of centralized crypto exchanges is also encountering challenges, with total spot and derivatives trading volumes decreasing by 17% in September.
Nonetheless, this downturn is typical for the month, which is often characterized by seasonal weakness, yet it has led to the lowest monthly trading activity since June. Significantly, Binance has experienced the most severe decline in market share among leading exchanges, as competitors like Bybit, Bitget, and Crypto.com have begun to claim a larger slice of the market.
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Jacob Joseph, a senior research analyst at CCData, pointed out that this trend may reflect a growing confidence among crypto users in alternative platforms that “provide similar user experiences,” such as low trading fees, minimal slippage, and high market liquidity.
Despite the prevailing challenges, Binance has recently hit a significant milestone by becoming the first centralized crypto exchange to surpass $100 trillion in lifetime trading volume, according to CCData.
As of this writing, the exchange’s native token, BNB, currently ranks as the fourth largest cryptocurrency on the market, trading at $545, reflecting a mere 1% increase in the past 24 hours amidst the broader market downturn.
Featured image from DALL-E, chart from TradingView.com
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