Binance, one of the leading cryptocurrency exchanges, has experienced a significant decline in market share, losing a quarter of its dominance since February.
The decrease in market share can be attributed to various factors, including increased regulatory scrutiny in the United States and the conclusion of free trading promotions. Meanwhile, other exchanges have witnessed a growth in their market shares during the same period.
Binance’s Market Share Decline
According to a report by the Financial Times (FT), Binance’s market share dropped from 57.5% in February to 43% as of May 31. This decline highlights the challenges faced by the exchange in recent months.
Impact of Regulatory Crackdowns
Binance’s liquidity took a hit in February when New York regulators halted the issuance of Binance USD (BUSD). This move was significant as BUSD accounted for around 40% of Binance’s monthly trading volume at the time.
Additionally, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance in March, alleging the operation of an unregistered trading desk.
End of Free Trading Promotions
The conclusion of a trading promotion further contributed to the decline in Binance’s market share. The exchange had offered users free trading in various bitcoin pairs, which had led to a surge in trading volume towards the end of the previous year.
Ilan Solot, co-head of digital assets at Marex, explained that the end of these promotions naturally resulted in reduced trading volume, impacting Binance’s short-term market share.
Market Share Shifts among Crypto Exchanges
While Binance faced a decline, other cryptocurrency exchanges experienced growth in their market shares during the same period.
Bullish, OKX, BitMEX, and Bybit saw the most substantial increases, with market share growth percentages of 1.55%, 1.44%, 1.25%, and 1.04% respectively, according to CCData. This indicates a shifting landscape in the cryptocurrency exchange market.