Binance Now Commands 55% of Crypto Spot Market Trading Volume - Is that Bad for Traders

Binance is the largest cryptocurrency exchange globally, and the centralized exchange seems to be growing its global footprint significantly. Binance’s market share of the global spot crypto trading industry increased to 55% in January, which is a 7% gain since the bankruptcy of FTX.

Binance’s market share increases to 55%

Binance is still dominating the crypto spot trading industry, with the CEX taking up a 55% global market share. The Binance exchange remains the largest one, with its daily trading volumes significantly higher than other exchanges’ trading volumes.

Binance’s market share has increased significantly since the collapse of the FTX cryptocurrency exchange. Binance was one of FTX’s main rivals, with the FTX co-founder, Sam Bankman-Fried, faulting Binance and its CEO, Changpeng Zhao, for the downfall of his crypto empire. In the early days of the FTX bank run, Binance rejected a deal to acquire the struggling rival because of gaps in the exchange’s financials.

The remaining rivals of the Binance exchange have been struggling to keep up. Coinbase, the largest exchange in the US, grew its spot market share by below 1% to reach 6.5%. At the same time, the Kraken and exchanges have reported a drop in their market shares.

During the summer of 2022, shortly before the FTX exchange filed for bankruptcy, it controlled around 5.6% of the global spot trading industry. Binance also appears to be growing its crypto derivatives trading, with these activities increasing from 58% to 61%.

Binance’s growth amid FUD

The growth of the Binance exchange comes despite the company facing a myriad of challenges. Last year, the crypto market underwent turbulent times, with crypto prices dropping drastically amid the failure of crypto companies such as Three Arrows Capital, Celsius, Voyager, BlockFi, and FTX.

Moreover, Binance is under regulatory scrutiny from US authorities. The authorities claimed that Binance was a counterparty to Bitzlato. The latter is a cryptocurrency exchange whose founder was arrested. Binance said that Bitzlato was being used to launder money. At the time, Binance said that it would work with law enforcement on the matter.

This week, the Binance exchange said it would suspend US bank transfers. The exchange did not give any reason for this suspension. However, in January this year, Binance said that its SWIFT banking partner, Signature Bank, would not support crypto exchange clients trading less than $100,000.

Moreover, the US Securities and Exchange Commission (SEC) seems to be cracking down on crypto trading activities. The SEC is allegedly planning to ban crypto staking services, which could affect a significant share of the industry.

Nevertheless, analysts do not believe that these factors will dent Binance’s dominance. Ilan Solot, the c-head of digital assets at Marex Solutions, opined that “Whatever pie is left for centralized exchanges, Binance will get a big part of it… you saw a period of very sharp declines in Binance’s reserves prompting a fear of a run on Binance, and that just didn’t materialize.”


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