Just a few months ago, Binance had the lion’s share of the global exchange market. Today, the firm is no longer the absolute ogre of the crypto exchange segment because it has lost market share to its competitors. How to explain Binance’s situation? We will explain everything to you.
The main reason for Binance’s crypto market share falling
Since the start of this year, Binance’s shares in the crypto exchange market have plummeted. According to some analysts, the world’s largest crypto exchange has lost around 30% of its share in this sector since the start of the year.
In fact, this would have gone from around 74% in December 2022 to around 50% in October 2023. This is where a significant market loss who questions. This, especially since if we take these figures into account, they concretely mean that Binance now only represents half of the exchange segment. How can we explain such decadence?
In a recent report, blockchain analysis company 0xScope elucidates the reasons. The first is the regulatory pressure exerted from all sides against the company throughout this year. In the US, UK, Germany, Japan, Singapore, China and even Nigeria, investigations, warnings and bans have reached Binance.
Consequences: the crypto firm has lost credibility. With these measures costing it access to strategic crypto markets, the company had to suspend some of its activities. This is the case for fee-free trading operations, for example.
Secondary reasons that are just as important
The regulatory argument alone does not explain why Binance’s shares on the exchange market have literally melted in less than a year. As a second argument, we cite competition and its increased ferocity in recent months.
Indeed, new crypto exchanges have emerged, particularly in Asia, creating competitive pressure on Binance. This is the example of the South Korean exchange Upbit which, in a way, recovered part of the Binance market. Upbit notably saw its market share increase from 5% to 15.3%, driven by its compliance with strict South Korean regulations.
In addition, experts point the finger at Binance’s internal policy which is poorly structured, in the context of the departure of several of its executives. Because, by listing a plethora of cryptos whose quality or legitimacy are not systematically verified, Binance has actually diluted the value of several popular assets. As a result, great confusion reigns among users. These are often victims of scams, when the crypto projects listed on Binance are not abandoned.
Despite everything, the company remains at the top of the crypto exchange segment with an overall market share of 51.2%. In a context where several other platforms are working to take its place, the company led by Changpeng Zhao must reinvent itself to remain competitive. We see the crypto company strengthening its regulatory compliance, improving user experience and launching new services to achieve this.
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