It is rare to see a company in the cryptocurrency sector resist pressure from regulators. Yet, Binance managed to do it…until recently. Indeed, according to blockchain analytics platform Kaiko, Binance’s market share has started to decline significantly. This fall could be related to the decision to end zero-fee exchanges for certain trading pairs, rather than the lawsuit filed by the Commodity Futures Trading Commission (CFTC).
Binance sees 16% decline in market share in Q1
Over the past few weeks, Binance has suffered a massive drop in market share. Two factors contributed to this situation: the sudden halt to zero-fee trading, as well as the lawsuit from the Commodity Futures Trading Commission (CFTC).
According to a recent publishedvsdidIwe of blockchain analytics platform Kaiko, Binance lost around 16% of its market share in total trading volume. Indeed, at the end of last December, the exchange held 65% market share, but this figure has now fallen to 54% at the end of the first quarter.
However, Kaiko pointed out that Binance still registers higher volume than all of its competitors. The decision to end fee-free trading for 13 trading pairs, including BNB, Bitcoin and Ether, with several fiat currencies and stablecoins, however, had a negative effect on trading volume.
“Overall, Binance’s excess volume has largely disappeared with the end of fee-free trading, resulting in an even dispersion of market share among the remaining exchanges,” Kaiko reported.
The Exchange holds up despite falling market share and media criticism
Despite this significant drop, Binance has held up in other areas. Indeed, the platform has maintained its supremacy in derivatives, having lost only 2% of market share during the last quarter.
Kaiko explained that the US branch, Binance.US, also slightly mitigated the loss of the parent exchange. This branch has experienced remarkable growth in market share, rising from 8% to 24% market dominance in the past quarter.
On the other hand, the last quarter was not favorable for most exchanges, except for Upbit, which managed to recover a significant share of trading volumes. Kaiko highlighted that the end of fee-free spot trading had a significant impact on Binance’s market share, contrary to the apprehension around the ongoing lawsuit.
It should be noted that over the past few weeks, Binance has come under a lot of criticism, especially through articles published in renowned media such as Forbes, Reuters and Wall Street Journal. The latter drew a parallel between Binance and Sam Bankman-Fried’s defunct FTX platform, thus discrediting the Exchange’s reputation.
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