Binance and Coinbase Market Shares at Stake Amidst Regulatory Turmoil: Data

It has been a wild ride for the world’s largest cryptocurrency exchange – Binance, this year. As US watchdogs pursue it for alleged violation of federal laws, the platform appears to be losing its market share at a rapid pace.

Blockchain analytical firm Kaiko reported that Binance’s spot market share has dropped to 50% from 64% earlier this year. That’s a 22% decline in the last seven months. Besides the CZ-led exchange, Kaiko’s data suggest that Coinbase also met a similar fate after plunging from 8% to 5.5% during the same period.

Binance, Coinbase Dwindling Market Share

With Binance and Coinbase’s grip on the market dwindling, other prominent crypto exchanges have boosted their market shares. Kaiko’s data suggest that the latter cohort witnessed growth from 26% since the beginning of the year to 44% in July.

Binance, for one, has been facing stiff competition from offshore exchanges such as OKX, Huobi, and Bybit since the start of 2023. All three have not only gained market share but have also scaled their footprints, especially in Asia.

Hong Kong has gained prominence as a crypto hub in Asia. But if Binance seeks refuge in the city-state, its uphill battle would involve making several operational adjustments just to score a license. Experts believe the SEC’s lawsuit against the crypto exchange could prove to be a hurdle in establishing a meaningful presence in the Hong Kong market.

Its rivals, OKX and Huobi, which also possess Chinese roots, have also been eyeing a piece. However, there could be a silver lining for the crypto market as a whole, which is undergoing a paradigm shift before the next bull run.

Crypto Exchanges Concentration

Upon zooming out, it was found that the crypto market saw a notable shift towards concentration, especially with Binance dominating the trading activity in 2023. This trend has been consistent over the past three years.

The current scenario is in stark contrast to the situation in 2020, when the largest exchange accounted for just 24% of the global trade volume. During the same period, the combined volumes of the two largest platforms, on the other hand, were still below 50%.

Such a growing concentration poses challenges for smaller exchanges, especially at a time when the market is dull. But with top crypto exchanges, including Binance, losing out on market share, there could be a silver lining in the form of an equal and unbiased opportunity while eliminating the pressure for smaller exchanges.