Binance, a stalwart in the cryptocurrency exchange market, has recently faced a significant decline in trading activity. In September, the exchange saw a 20% drop in trading volume compared to the previous month, amidst increasing competition from platforms like Crypto.com, which experienced a 40% surge in trading volumes during the same period.
According to a report from CCData, Binance’s derivatives trading volume plummeted by 21% in September to $1.25 trillion, marking its lowest level since October 2023. This decline resulted in Binance’s share of the derivatives market falling to 40.7%, its lowest since September 2020.
Spot trading on Binance also took a hit, decreasing by 22.9% to $344 billion, the lowest since November 2023. This drop brought Binance’s spot market share down to 27%, its lowest since January 2021. Overall, Binance’s combined spot and derivatives market share fell to 36.6%, the lowest since September 2020.
Despite these setbacks, Binance still maintains its position as the leading platform for spot trading by volume among centralized exchanges. However, Crypto.com has been making significant strides in the market, with its spot and derivatives trading volumes increasing by 40.2% and 42.8% in September, reaching $134 billion and $149 billion, respectively. With a combined market share of 11% for the month, Crypto.com has emerged as the fourth-largest exchange by volume.
The overall trading activity on centralized exchanges followed Binance’s decline, with total combined spot and derivatives volume dropping by 17% to $4.34 trillion in September, the lowest monthly volume since June. CCData attributed this decrease to typical seasonal trends where trading activity slows down in late summer.
Analysts anticipate that trading activity will pick up in the coming months as the U.S. Federal Reserve implements rate cuts, which could enhance liquidity and attract more capital into cryptocurrencies.
Binance’s decline in trading activity has been linked to growing regulatory pressure, particularly in the United States. The SEC recently filed an amended complaint against Binance, scrutinizing the exchange’s token listing practices. This legal action followed a lawsuit in June 2023, accusing Binance of operating as an unregistered broker, clearinghouse, and trading platform, and offering unregistered securities. To address these issues, Binance agreed to pay $4.3 billion in fines to various U.S. regulators.
Founder and former CEO Changpeng “CZ” Zhao pleaded guilty to violating the Bank Secrecy Act due to inadequate KYC systems. He was sentenced to four months in prison and was released last week. These regulatory challenges have impacted Binance’s operational stability and eroded its reputation among users and investors.
As competitors like Coinbase and Bybit capitalize on Binance’s regulatory woes, the exchange’s dominance in the market may continue to wane. The landscape of the cryptocurrency exchange market is evolving, and Binance faces an uphill battle to regain its former position in the industry.