Binance and Crypto.com, two of the largest cryptocurrency exchanges, are seeing their market share shrink as smaller competitors and decentralized exchanges (DEXs) rise in prominence.
According to a report by 0XScope, Binance experienced a sharp decline in both its spot and derivatives trading volumes over the past year. This trend is reshaping the competitive landscape of centralized exchanges (CEXs) as decentralized platforms continue gaining traction.
Binance’s Market Share Decline
Once holding a commanding lead, Binance’s spot trading volume dropped 13% year-over-year, falling from a 52.5% market share in October 2023 to 39.5% by October 2024.
The exchange’s performance in the crypto derivatives market mirrored this trend, with its share decreasing from 50.9% to 42.5% during the same period. This decline marks a significant setback for the world’s largest crypto exchange, as it faces growing competition from smaller exchanges.
Similar declines were observed by Crypto.com, a centralised cryptocurrency exchange (CEX), whose market share dropped from 15% in October 2023 to less than 4% by February 2024. The article claims that the drop occurred at the same time that Binance and Upbit’s market shares increased.
ByBit and Bitget Rises as Tough Competitors
Smaller exchanges like Bybit, Bitget, and OKX are taking advantage of the declining market share of Binance. With a 3.2% market share in 2023, Bybit was the seventh-largest exchange; today, it holds a dominant 8.51%, making it the second-largest.
Another up-and-coming rival, OKX, became the third-largest spot exchange with a rise in its market share from 5.4% to 6.38%.
Over the previous year, Bitget’s market share has increased significantly, going from 8.2% to 12.7%. Bitget CEO Gracy Chen credited smart alliances and a strong emphasis on user-centric development for this achievement.
Partnerships with international sports stars like Lionel Messi and teams like Juventus have increased Bitget’s reputation and credibility, attracting new users to the website.
Trading Activity Decline Across Exchanges
According to the research, trading activity on cryptocurrency exchanges generally decreased last month, with both spot and futures trading volumes declining 17%. According to CCData experts, a poor mid-year trading season usually ends in September, followed by a busier last quarter.
“With catalysts such as increased market liquidity following the Federal Reserve’s interest rate cut and the upcoming U.S. election, trading activity on centralised exchanges is expected to rise in the coming months,” according to a study by Yahoo Finance.
The Rise of Decentralized Exchanges (DEXs)
Decentralised exchanges are gaining traction and presenting a fresh challenge to the dominance of established exchanges, coinciding with the expansion of smaller CEXs. Trading volumes for DEXs have risen dramatically over the past year, reaching $250 billion between March and June of 2024, which is the first time since December 2021 that DEXs have achieved this milestone.
A new age of diversification in the cryptocurrency trading industry is being heralded by the increasing rivalry from smaller CEXs and DEXs, which are posing a threat to Binance’s market domination.