Binance trading activity has dropped to a 4-year low as it faces a 20% drop in trading volume.
Binance, which is known for its dominance in the crypto exchange market since its inception, has recently seen a sharp decline in its trading activity. In September, the transaction volume showed a decrease of 20% compared to the previous month. This decline is due to increased competition from platforms such as Crypto.com, which showed a 40% trading volume during the same period.
Binance dominance hit 2020 low
Binance derivatives trading volume fell 21 percent to $1.25 trillion in September, the lowest level since October 2023, according to a CCData report. This decline dropped Binance's results market share to 40.7%, the lowest since September 2020.
Space trading fell 22.9% to $344 billion, the lowest since November 2023. This dropped Binance's spot market share to 27%, the lowest since January 2021.
Overall, Binance's combined spot and derivatives market share fell to 36.6%, the lowest since September 2020.
Despite these setbacks, Binance is the leading platform for spot trading by volume among centralized exchanges.
Meanwhile, Crypto.com is making significant progress among the central exchanges. In September, spot and derivatives trading volumes increased by 40.2% and 42.8%, reaching $134 billion and $149 billion, respectively. With a total market share of 11% in the month, Crypto.com has become the fourth largest exchange by volume.
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Despite the growth of Crypto.com, overall trading activity on centralized exchanges followed the decline of Binance. Total spot and derivatives volume fell 17% to $4.34 trillion, the lowest monthly volume since June.
According to Ciddata, this reduction follows the usual seasonal trends, and trading activity tends to decrease at the end of the summer. Spot trading volume fell 17.2 percent to $1.27 trillion, while exchange trading fell 16.9 percent to $3.07 trillion.
Analysts expect trading activity to pick up in the coming months as the US Federal Reserve ramps up rate cuts.
Binance's decline is linked to growing regulatory pressure.
Last month, the US Securities and Exchange Commission (SEC) filed an amended complaint against Binance, investigating the exchange's token listing practices. This comes after the SEC filed charges in June 2023 that Binance operated as an unregistered broker, clearing house and trading platform and offered unregistered securities. To resolve these issues, Binance agreed to pay $4.3 billion in fines to several US regulators.
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Founder and former CEO Changpeng “CZ” Zhao pleaded guilty to violating the Bank Secrecy Act (BSA) for not having sufficient know-your-customer (KYC) knowledge. However, he was sentenced to four months in prison and released last week.
These events have affected Binance's operational stability and damaged its reputation among users and investors.
Due to these challenges, competitors such as Coinbase and Bybit have seized the opportunity to overturn Binance's once dominant position.
As these rivals continue to grow and benefit from Binance's regulatory woes, the exchange's dominance could further decline.
