Binance’s Market Share Drops as Rivals and DEXs Gain Ground: Report

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Hassan Shittu

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Hassan Shittu

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October 24, 2024

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Binance, the world’s largest cryptocurrency exchange, has witnessed a significant decline in its market dominance over the past year. As competition heats up from both centralized and decentralized exchanges (DEXs), Binance’s once unassailable lead in the crypto trading space is shrinking.

According to a report released by 0xScope, Binance’s share of spot and derivatives trading has seen noticeable dips as rivals like Bybit, Bitget, and OKX continue to rise.

Binance’s Market Share: Waning Dominance in Spot and Derivatives Trading

The decline in Binance’s market share has been particularly evident in spot trading, where the exchange saw its share drop from 52.5% in October 2023 to 39.5% by October 2024.

This 13% year-over-year decline can be largely attributed to the pressure Binance has been facing from its competitors.

Although it still leads the field with a total spot trading volume of $5.78 trillion over the past 12 months, Binance’s once-monolithic grip on the market is loosening.

Meanwhile, Binance’s share of the crypto derivatives market also declined, falling from 50.9% in October 2023 to 42.5% a year later.

This represents an 8.4% drop, which further illustrates the exchange’s mounting challenges as smaller platforms advance their game.

Despite these losses, Binance remains the largest player in the global centralized exchange (CEX) market, with a combined total trading volume of $22.5 trillion, a large chunk of the $54 trillion market volume processed by the 22 major exchanges covered in the report.

However, Binance’s dip in dominance has created opportunities for others. Bybit, in particular, has surged in spot and derivatives trading, jumping from seventh place last year with a 3.2% share to second place with 8.51% of the spot market.

Bybit’s rise to prominence is because of its growing share in the derivatives market, which climbed from 11.3% to 13.98%.

OKX and Bitget have also benefited from Binance’s losses, with OKX increasing its derivatives market share from 15.5% to 19.83% and Bitget growing from 8.2% to 12.73%.

The Rise of DEXs and Broader Market Shifts

In addition to the growth of smaller CEXs, decentralized exchanges (DEXs) are increasingly gaining momentum. Over the past 12 months, DEX trading volumes have grown substantially, surpassing $250 billion in monthly trades for the first time since 2021.

As of October 17, 2024, DEX spot trading volumes reached 13.6% of the volume processed by CEXs, a significant increase from previous years. For every $1 billion traded on centralized exchanges, $136 million is traded on decentralized platforms.

While Binance’s market share has dropped, the exchange is showing signs of recovery following a challenging year marked by legal battles. In June 2023, the U.S. Securities and Exchange Commission (SEC) sued Binance and Coinbase for alleged securities violations.

Though no misappropriation of user funds was found, Binance faced charges related to Anti-Money Laundering (AML) laws and agreed to settle the case with a $4.3 billion fine—one of the largest criminal fines in history.

Despite these legal hurdles, Binance has managed to maintain its position as the leading CEX by volume. Its ability to bounce back from these challenges has been bolstered by bullish sentiment in the crypto market, with Bitcoin reaching new all-time highs of over $73,000 in 2024 and the overall crypto market capitalization surpassing $2 trillion.

Regarding regulation, Binance recently announced it will terminate its retail referral program for users in Turkey as of October 23, 2024, in compliance with local laws. The program, which allowed users to earn commissions by referring others, will no longer be available, though commissions will still be paid for users referred before the cutoff.