Binance’s market share continues to decline amid rally

The recent surge in cryptocurrencies has injected fresh vigor and enthusiasm into an industry that had been severely impacted by FTX’s collapse, regulatory scrutiny, and numerous bankruptcies. We’re so back, right anon?

It certainly seems that way when I glance at my inbox. Companies that attracted substantial investments at staggering valuations in 2021-22, and remained conspicuously silent for much of 2023, are now expressing interest in participating in our podcast and sharing their insights on the market.

Nonetheless, the sense of relief that bitcoin price cresting $35,000 brings to certain market participants might not be shared by others. Specifically, Binance, which has experienced a gradual decrease in its market share over the past year, comes to mind. According to data from The Block’s data dashboard, its market share among exchanges that do not support USD has decreased from 74% in December 2022 to 50% this month.

The slings and arrows underpinning the decline have been well-documented. Decrypt published a piece that outlines at least 16 executive exits, including Binance UK Head Jonathan Farnell, Binance.US’s Brian Shroder, and the exchange’s former chief risk officer Sidney Majalya. Then there’s the puzzling case of Seth Levy. The Citadel veteran “joined” Binance with much fanfare to lead its market surveillance efforts. But his LinkedIn makes no mention of Binance and it appears he never left Citadel. A source says that he briefly joined the exchange, then backtracked and returned to Citadel.

In any case, these personnel changes are just the beginning. The company is also grappling with charges from both the Commodities Futures Trading Commission and the US Securities and Exchange Commission. This development has raised concerns among a number of trading firms, leading them to scale back their trading activities on the exchange.

“It is tough for institutional guys to commit resources given the headline risk,” noted one trading executive in the crypto options space. “HFT guys have outsized volume due to the nature of the trading style.”

The pullback among traders from Binance was particularly evident on October 23. While Bitcoin was on the rise, Binance’s market share virtually dropped to zero, coinciding with Bitcoin’s surge to $34,000. In contrast, OKX witnessed its market share surpassing 50%, according to data from Kaiko. It’s quite unusual.

CZ can say 4 util he’s blue in the face. It doesn’t change the reality that less people are trading on his exchange.

PS: I know, I punted the Dubai deep dive once again. I promise, just give me the weekend, and it will be ready for Tuesday.

This first appeared in Frank Chaparro’s biweekly The Scoop Newsletter. Sign up now.

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