Centralized Exchanges Experience Decline in Trading Volume
In September, centralized exchanges saw a significant decrease in trading volume, marking the third consecutive month of declining activity. According to a recent report by researcher CCData, the combined spot and derivatives trading volume on these exchanges dropped by 20.3% to $1.67 trillion. This is the lowest monthly trading volume recorded since December 2022. The decline can be attributed to a lack of market volatility and seasonal effects typically observed in the third quarter, resulting in the lowest quarterly volumes since Q4 2020.
Binance’s Trading Volume Plummets
The report also highlights that Binance, one of the leading centralized exchanges, experienced a notable decline in spot trading volume. In September, Binance’s spot trading volume decreased by 36.8% to $115 billion, the lowest monthly volume recorded since October 2020. This marks the third consecutive decline in volumes since June. The halt of the zero-fee trading promotion for BTC-TUSD pairs implemented last month further contributed to the decrease in trading volume. Binance also witnessed a decline in derivatives trading volume, which fell by 20.8% to $686 billion, the lowest monthly volume since December 2020.
Market Share Shifts Among Exchanges
Despite its decline, Binance still holds a dominant position in the derivatives market with a market share of 51.5%. However, this is the lowest it has been since March 2022. Other exchanges like OKX, Bybit, and Bitget have capitalized on Binance’s downturn and increased their market shares to 19.6%, 13.6%, and 9.43%, respectively.
Binance Faces Regulatory Challenges
Binance’s market share has been consistently decreasing for seven months, influenced by a lack of market volatility and regulatory challenges. In September, Binance’s spot market share dropped to 34.3%, compared to 38.5% the previous month. In the derivatives market, Binance’s market share fell to 51.5% from 53.5% in August and 62.6% in January.
The exchange has faced increased regulatory scrutiny globally. The SEC filed a lawsuit against Binance and its CEO in June, accusing them of operating an unregistered exchange. French authorities conducted a visit to Binance’s office in France last month to investigate allegations of illegal provision of digital asset services and money laundering. Additionally, the Securities and Exchange Commission in Nigeria ordered Binance to cease operations in the country.
Hot Take: Centralized Exchanges Struggle with Declining Trading Volume
The decline in trading volume on centralized exchanges, including industry leader Binance, raises concerns about the overall health and activity levels of the cryptocurrency market. Factors such as low market volatility and regulatory challenges have contributed to this decline. As competition among exchanges intensifies, other platforms like OKX, Bybit, and Bitget are capitalizing on Binance’s downturn by increasing their market shares. It remains to be seen how centralized exchanges will navigate these challenges and regain momentum in trading volume.
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