Binance’s market share hits four-year low

In September 2024, Binance saw a significant drop in trading volume. In a report by CCData, the platform has reported the least trading volumes in both the derivatives and the spot since December 2023.

The report revealed that Binance’s derivatives trading volume declined by 21% to $1.25 trillion in September. According to the report, this is its worst performance since October 2023. This decline caused the exchange’s derivatives market share to drop to 40.7%, the lowest it has been since September of last year. The decline in derivatives trading is a major blow to an exchange that has dominated in this space.

The spot trading volume on Binance also receded by 22.9% to $344 billion from the previous month, the lowest since November 2023. This reduced Binance’s market share to 27% of the global spot market, the lowest it has been since January 2021. Binance’s market share in spot and derivatives trading dropped to 36.6%, the lowest since September 2021.

Regulatory pressure shakes up Binance

Binance’s shrinking market share has been linked to mounting regulatory pressure. Following a series of legal and regulatory challenges, Binance has been under global scrutiny since March 2023. 

In June 2023, Binance was sued by the U.S. SEC, and the regulator claimed that Binance was operating as an unregistered broker and that it had sold ”unregistered securities. Binance also recently agreed to pay $4.3bn in fines to US regulators on these charges. 

Former Binance founder and former CEO Changpeng Zhao was charged with Bank Secrecy Act violations and was given a four-month sentence. It is worth noting,  Zhao was set free last week after serving time in jail.

Following the plea, CZ resigned from his position as the CEO of Binance in November 2023. One of the conditions of his plea deal bars him from playing an active role in the running of Binance.

Crypto.com bucks trend with impressive gains

While Binance was hit hard, Crypto.com made some significant gains during the same period. The exchange’s spot trading volume rose by 40.2% to $134 billion, while its derivative trading volume rose by 42.8% to $149 billion. Crypto.com became the fourth largest exchange by trading volume in September, accounting for an 11% market share.

Despite these gains, overall trading activity across centralized exchanges also declined. The overall spot and derivative turnover fell 17% to $4.34 trillion daily, a low not seen since June 2024.

Analysts have noted, “The decline aligns with historical seasonality trends, which typically see lower trading activity in late summer.” They predict that the trading intensity will increase in the next couple of months.  

 Factors such as the possibility of the U.S. Federal Reserve cutting interest rates will likely facilitate liquidity in the market again.