Major global cryptocurrency exchange Binance is facing continued challenges as it loses market share amidst regulatory issues in the United States. According to analysis from cryptocurrency data provider CCData, Binance’s spot market share has fallen for the seventh consecutive month in September 2023.
Bloomberg reported on October 5 that Binance’s spot market share dropped from 38.5% in August to 34.3% in September. This decline is significant considering that in January 2023, Binance’s spot market share accounted for as much as 55.2%.
Not only has Binance lost market share in the spot market, but it has also experienced a decline in the derivatives market. In September, Binance’s derivatives market share tumbled from 53.5% in August to 51.5%. At the start of the year, Binance’s dominance in the derivatives market exceeded 62%.
While regulatory challenges in the U.S. contribute to the decline in Binance’s market share, CCData research analyst Jacob Joseph suggests that it is not the sole reason. Joseph believes the drop is also a result of Binance ending its zero-fee trading promotion for major trading pairs. This change may have affected traders’ preferences and led them to explore alternative exchanges.
Additionally, Binance’s market share decrease coincides with its exit from key markets throughout the year. In September, Binance announced its complete withdrawal from Russia by selling its entire local business to the newly launched CommEx exchange. Russian visitors accounted for nearly 7% of Binance’s platform traffic, highlighting the country’s importance as a market for the exchange.
In early September, Binance made changes to its trading fees, reintroducing regular taker fees based on the user’s VIP level. For regular users, Binance began charging a 0.1% taker fee on spot and margin trades. This adjustment to the fee structure may have also impacted trading volume on the platform.
The lost spot trading volume from Binance has reportedly been distributed among other exchanges such as HTX (formerly Huobi), Bybit, and DigiFinex. Rival exchanges like OKX, Bybit, and Bitget have seen an increase in market share in the derivatives market.
It is clear that Binance’s regulatory challenges and changes in its fee structure have contributed to its declining market share. As the cryptocurrency landscape continues to evolve and regulatory scrutiny intensifies, exchanges must navigate these obstacles to maintain their competitive edge. Binance will need to address these issues effectively to regain its position in the global cryptocurrency market.