The realm of cryptocurrencies has been fraught with challenges lately. In the midst of this turmoil, Binance, the top digital currency exchange globally, has experienced a significant setback, losing 16% of its market share in the first quarter and closing the quarter at 54%.
The CFTC’s legal measures and Binance’s termination of its zero-fee trading initiative are the primary reasons for this drop.
A recent report by Kaiko highlighted that Upbit was the only exchange to claim a significant share of volume, with much of the recent volume on the Korean exchange concentrated in XRP trading pairs. In the meantime, Binance.US has compensated for the global corporation’s shortcomings by tripling its market share from 8% to over 24%.
During Q1, Coinbase, known for its strong regulatory compliance efforts, experienced a drop in its market share from a weekly average of 60% to 49%.
Even though Kraken had to shut down its service earlier this year, Bittrex announced it was shuttering its U.S. operations due to regulatory uncertainties. Coinbase received a Wells Notice focused on its staking service.
Currently, the remaining exchanges in the U.S. market are under immense pressure, making it appear delicate. Despite this instability, trade volume has risen, reaching a four-month peak in mid-March and staying consistently high during a broader market upswing. However, following the termination of Binance’s free program, trade volumes started plummeting sharply.
Derivatives Dominance Maintained By Binance
According to the report, Binance remains the top player in the derivatives market, with only a marginal 2% decrease in its share of perpetual futures trade volume. It indicates that the majority of the market share decline was a result of discontinuing zero-fee spot trading rather than concerns related to legal actions.
Overall, in the aftermath of the FTX collapse, Binance and OKX emerged as the clear winners, whereas Bybit and several smaller exchanges experienced a loss in their market share. Binance’s market share surged from 50% to 65% by November 2022, while OKX saw its market share rise from less than 10% to 17%.
Conversely, Bybit, along with three other smaller exchanges, namely Huobi, Bitmex, and Deribit, witnessed a decline in their respective market shares.
Nevertheless, the crypto market remains uncertain due to the regulatory crackdown, but the market is resilient despite the challenges. The loss of market share by Binance in the spot market clearly indicates that even the largest exchanges are not immune to regulatory pressure.
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