Binance saw a significant drop in trading activity in September, according to a CCData report on Thursday. Derivatives trading volume fell 21% to $1.25 trillion, the lowest since October 2023, the report said. As a result, Binance's derivatives market share fell to 40.7%, its lowest since September 2020.
Similarly, Binance's spot trading volume also fell 22.9% to $344 billion, reducing the exchange's market share to 27%, its lowest level since January 2021.
Overall, Binance's combined market share fell to 36.6%, its lowest since September 2020, despite still holding the lead in global spot trading volume among centralized exchanges.
Spot trading volume on centralized exchanges fell 17.2% to $1.27 trillion, the lowest since June. Similarly, derivatives trading volume on these exchanges fell 16.9% to $3.07 trillion, also the lowest since June.
Additionally, open interest (OI) on retail derivatives exchanges rose 32.1% to $53.8 billion, driven by traders’ expectations of increased market activity. The increase followed the Federal Reserve’s decision to cut interest rates by 50 basis points.
Binance's open interest increased by 27.5% to $18 billion. Bitget, OKX, and Bybit also reported increases in open interest, up 28.2%, 32.0%, and 28.5% to $9.65 billion, $12.8 billion, and $5.97 billion, respectively.
This growth reflects growing speculation among traders due to changes in the Fed's monetary policy.
Meanwhile, Crypto.com continues to make headway among centralized exchanges. Its spot and derivatives volumes increased 40.2% and 42.8% in September, reaching $134 billion and $149 billion, respectively. With a combined market share of 11% in September, Crypto.com became the fourth-largest exchange by volume.
Overall, overall trading activity across centralized exchanges mirrored Binance’s decline. Combined spot and derivatives trading volume fell 17% to $4.34 trillion, marking the lowest monthly volume since June.
The decline “is consistent with historical seasonal trends, which typically show lower trading activity in late summer,” according to CCData. Monthly spot trading volume on exchanges fell 17.2% to $1.27 trillion, while derivatives trading volume fell 16.9% to $3.07 trillion.
Analysts predict trading activity will recover in the coming months as the US Federal Reserve steps up interest rate cuts, which is expected to boost liquidity and capital flows into riskier assets, including cryptocurrencies.
“The report concludes that the decline in trading activity marks the end of the season, with catalysts – including the Fed’s first rate cut since March 2020 – likely to fuel the next rally in the current cycle.”
Reasons for Binance's Decline
Binance’s decline in dominance coincides with increasing regulatory pressure on the exchange. Last month, the U.S. Securities and Exchange Commission (SEC) filed an amended complaint against Binance, scrutinizing the exchange’s token listing practices.
This follows a lawsuit filed by the agency in June 2023, alleging that Binance operated as an unregistered broker, clearing house, and trading platform, and offered unregistered securities. The exchange agreed to pay a $4.3 billion fine to U.S. regulators to settle the charges.
The company's founder and former CEO, Changpeng Zhao, pleaded guilty and was sentenced to four months in prison for violating the Bank Secrecy Act (BSA) by failing to set up adequate KYC systems at the exchange. He was released last week.
Another reason is the change of CEO. Richard Teng, a Singaporean “amateur” manager, has not shown the agility and strategic vision of CZ, the founding CEO of Binance. He did not create new trends such as Launchpool, Launchpad, IEO or token airdrop like CZ did before. Instead, Binance listed many low-quality projects, leading to the “pump and dump” phenomenon. Over the past year, most projects on Binance’s Launchpool have decreased by 50% to 90%, such as ALT, STRK, PIXEL, ENA, ETHFI, AI, XAI, DOGS, NOT, CATI, Hamster Kombat… The situation of selling tokens immediately after listing on Binance has become obvious, causing users to question Binance’s project review process.
Binance's Launchpool creates almost no new value for users, with a yield of less than 1%. Even if you buy FDUSD to participate, you will suffer losses due to exchange rate differences after the program ends. Rival exchanges like Bybit and Bitget are doing much better than Binance right now.
When CZ was in power, rival exchanges often copied Binance's strategy. However, now, Binance's Richard Teng is following the market and copying other exchanges, such as opening more Pre-market exchanges, which reduces the value of projects when they are listed.
