Binance, known for its domination in the crypto exchange market since inception, has recently seen a significant slump in its trading activity. The exchange experienced a 20% drop in trading volume during September, compared to the previous month. This decline comes amid rising competition from platforms like Crypto.com, which saw a 40% surge in trading volumes over the same period.
Binance’s Dominance Touches 2020’s Low
According to a report from CCData, Binance’s derivatives trading volume dropped by 21% in September to $1.25 trillion, the lowest level since October 2023. This decline brought Binance’s share of the derivatives market down to 40.7%, its lowest since September 2020.
Spot trading was also hit hard, falling by 22.9% to $344 billion, the lowest since November 2023. This plunged Binance’s spot market share to 27%, the lowest since January 2021.
Overall, Binance’s combined spot and derivatives market share dropped to 36.6%, the lowest since September 2020.
Despite these declines, Binance remains the leading platform for spot trading by volume among centralized exchanges.
Meanwhile, Crypto.com is making notable gains among centralized exchanges. Its spot and derivatives trading volumes increased 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 become the fourth-largest exchange by volume.
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Despite Crypto.com’s growth, overall trading activity on centralized exchanges followed Binance’s decline. Total combined spot and derivatives volume dropped by 17% to $4.34 trillion, marking the lowest monthly volume since June.
CCData noted that this decrease follows typical seasonal trends, where trading activity tends to slow down in late summer. Spot trading volumes fell by 17.2% to $1.27 trillion, while derivatives trading dropped by 16.9% to $3.07 trillion.
Analysts expect trading activity to pick up in the coming months as the U.S. Federal Reserve increases rate cuts, which is likely to improve liquidity and bring more capital into cryptocurrencies.
Binance’s Decline Tied to Growing Regulatory Pressure
Last month, the U.S. Securities and Exchange Commission (SEC) filed an amended complaint against Binance, examining the exchange’s token listing practices. This came after the SEC’s lawsuit in June 2023, which accused Binance of functioning as an unregistered broker, clearinghouse, and trading platform, and for offering unregistered securities. To resolve these issues, Binance agreed to pay $4.3 billion in fines to several U.S. regulators.
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Founder and former CEO Changpeng “CZ” Zhao pleaded guilty to violating the Bank Secrecy Act (BSA) due to inadequate know-your-customer (KYC) systems. However, he was sentenced to four months in prison and was released last week.
These events have impacted Binance’s operational stability and tarnished its reputation among users and investors.
As a result of these challenges, competitors like Coinbase and Bybit have seized the opportunity to chip away at the dominance that Binance once held.
With these rivals continuing to grow and potentially benefiting from Binance’s regulatory troubles, the exchange’s dominance may decline even further.