At the close of 2022, Binance held a commanding 75% share of the market among exchanges that didn’t support the US dollar. However, as we fast-forward to August 2023, Binance’s market supremacy has dwindled to approximately 54%. According to available data, it is anticipated that the world’s largest exchange will further decline to about 50.76% in September 2023.
In contrast, Binance’s competitor, Upbit, has experienced a notable surge in market share, rising from 6.19% in September 2022 to 14.51% in September 2023. Another rival, Huobi, has also witnessed substantial growth, going from 2.83% in September 2022 to 8.58% in September 2023. This trend unmistakably reveals a significant migration of users from this exchange to alternative platforms.
Meanwhile, in the realm of exchanges supporting the US dollar, Coinbase remains a dominant force. In September 2022, Coinbase controlled roughly 25% of the market volume. A year later, the company’s influence has expanded to encompass nearly 41% of the market share. This surge in Coinbase’s market share can be attributed, in part, to FTX’s departure in November 2022, which prompted a considerable number of users to transition to other platforms.
Binance’s Dominance Crisis: What’s Behind the Shift?
Binance, along with its CEO Changpeng Zhao (CZ), has faced legal action from both the US Securities and Exchange Commission (SEC) and the Commodity and Futures Trading Commission (CFTC). The SEC has filed a lawsuit against the company, alleging a violation of U.S. securities laws. Simultaneously, the CFTC has taken legal action, accusing Binance of breaching federal laws and failing to register the exchange in the United States. Furthermore, Binance is currently under investigation in France and has recently withdrawn from the Dutch market. These ongoing regulatory concerns have likely contributed to the decline in the exchange’s market dominance.
In addition to these challenges, several high-ranking executives, including the CEO of its U.S. division, have recently departed from the company. Additionally, Binance has implemented substantial workforce reductions throughout the year, raising questions about the internal state of the exchange.
Another significant factor contributing to the decline in Binance’s performance could be the discontinuation of its zero-fee Bitcoin (BTC) trading promotions. The introduction of this feature in July 2022 attracted a substantial influx of customers to the platform, and its cessation may have played a role in the decline in the company’s market figures.