Binance Sees Spot Market Share Fall To 34%, What’s Going On?

Binance, the world’s leading cryptocurrency exchange’s spot market share has fallen for the seventh consecutive month and the crypto firm has reportedly lost more of its spot market share in the previous month.

Binance Sees Spot Market Share Decline

Reports have shown that the trading platform has experienced a decline in its spot market share for the seventh time in a row. The Binance exchange spot market share fell from 38.5% in August 2023, to 34.3% in September 2023 according to data from CCData.

CCData noted that the spot trading volume that the trading platform lost went to other cryptocurrency exchanges. These include HTX (formerly Huobi), OKX, Bybit, Bitget, and DigiFinex.

The trading platform’s trading volumes also experienced a 57% decline in its 7-day trading volume for Bitcoin (BTC) since early September. In derivatives, the platform’s market share fell from 53.5% to 51.5% in August.

Around 12,230 BTC, or $330 million, as well as about 198,200 Ethereum (ETH), or $323 million, have been withheld from the trading platform since the beginning of August 2023. 

One of the major reasons behind the platform’s decline in spot market share is due to another zero-fee promotion activity that ended in September. The zero-fee promotion initially helped to boost the trading activity in the platform but since the halting of the zero-fee promotion, investors have been seeking other alternative platforms.

“The halting of zero-fee trading promotion for popular trading pairs, combined with the concerns around the regulatory scrutiny on the exchange has contributed to this decline,” research analyst at CCData Jacob Joseph stated.

Binance’s zero-fee promotion came to an end in September 2023. It is believed that the halting of the zero-fee promotion might be traced back to the platform’s decline in Bitcoin trading volume in September.

On September 7, the platform discontinued a promotion that let users trade freely between Bitcoin and the TrueUSD stablecoin which led to a decline in market share and volume on the platform.

BNB price sitting at $212 despite exchange's woes | Source: BNBUSDT on Tradingview.com

The platform’s 7-day average volume fell by 26% in the first week of September. Also, since the incentive expired, the trading pair’s BTC/TrueUSD seven-day average volume fell by 89%.

In addition, the platform’s share of all spot trading experienced a decline from 65% to 58.8% right after it ended its zero-fee campaign for trading in Bitcoin cryptocurrency pairs in March.

However, research analyst Jacob Joseph at CCData highlighted that the major reason behind the decline in Binance’s trading volume is not the discontinuation of the Zero-fee campaign.

“The ending of zero-fee trading isn’t the sole reason behind low trading volumes, the current regulatory concerns around the exchange might have driven users to other platforms,” Jacob stated.

The exchange’s legal troubles are no exception to the reasons behind the decline in spot market share. Binance and its Chief Executive Officer Changpeng CZ Zhao are facing several lawsuits filed against them by the United States Securities and Exchange Commission (SEC) and the United States Commodity Futures Trading Commission (CFTC).

However, the trading platform and Changpeng filed a joint motion against the SEC to dismiss the lawsuit filed against them by the SEC including its US arm Binance.US.

Featured image from CNBC, chart from Tradingview.com