Following a report by Kaiko on June 25, Bybit has overtaken Coinbase to become the world’s second-largest crypto exchange by trading volume. 

Since October, Bybit’s market share has remarkably increased from 8% to 16%, surpassing Coinbase in March. Despite improved profits and revenue, Coinbase’s market share grew by 1% during the same period.

The rapid growth of Bybit can be attributed to various factors, including competitive fees and strategic product offerings. Ben Zhou, co-founder and CEO of Bybit, emphasized the exchange’s commitment to providing low fees and a secure trading platform, stating, 

“Our commitment to providing competitive fees, a safe and secure platform, and innovative products like Unified Trading Account has resonated with our users.”

Binance’s Market Share Declines Amid Regulatory Issues

Binance, the largest crypto exchange by trading volume, has experienced a decline in market share, dropping from 60% to 54% since October. This 6% decrease is largely attributed to the exchange’s regulatory challenges. 

Source: Kaiko

In November 2023, U.S. officials announced a $4.3 billion settlement with Binance for Anti-Money Laundering violations, one of U.S. history’s most substantial criminal fines. Additionally, in June 2023, the SEC sued Binance for alleged securities violations, although no evidence of user fund misappropriation was found.

These regulatory issues have impacted Binance’s dominance in the industry, allowing competitors like Bybit to gain traction. According to Kaiko’s analysis, Bybit’s growth appears to have benefited from Binance’s regulatory troubles.

Bybit’s Moves and Competitive Edge

Bybit’s introduction of zero-fee trading for Circle’s USD (USDC) stablecoin in February 2023 has significantly boosted its market share. The exchange’s average fees are among the lowest in the industry, comparable to those of Binance and OKX. This competitive fee structure has attracted a substantial number of traders to Bybit.

The exchange has also seen a notable increase in Bitcoin (BTC) and Ethereum (ETH) trading volumes. Bybit’s market share for these assets has surged from 17% to 53% over the past year. In contrast, Binance’s BTC and ETH volumes have declined, dropping their share from 59% to 43%. Instead, Binance has seen a rise in altcoin trading, which is more susceptible to market volatility.

Bybit’s success is not limited to spot trading. The exchange has also solidified its position as the second-largest derivatives market after Binance. While Bybit’s share of open interest has remained steady since October, the first half of 2023 saw significant growth, likely influenced by Binance’s ongoing regulatory challenges.

According to Bybit’s Institutional Report 2024, global centralized cryptocurrency exchanges (CEXs) have reported substantial increases in trading volumes since late 2023. OKX reported a 278% surge in 30-day volumes since October 2023, with Binance and Bybit also experiencing major growth, at 239% and 264%, respectively. Coinbase, although showing a notable 193% increase, still trails behind the average growth rate of other major exchanges.

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