Binance’s Market Share Declines, Lose Bitcoin Dominance to Emerging Exchanges

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One of the leading cryptocurrency exchanges in the world, Binance, has faced increased competition after ending its large-scale zero-fee promotion last year. This strategic move has led to a decline in Binance’s Bitcoin (BTC) market share, allowing smaller exchanges to gain traction.

Market Share Shift: From 80% to 55%

According to a post by Kaiko Data, Binance’s BTC market share has dropped significantly over the past year.

“Binance’s $BTC market share currently stands at approximately 55%, down from over 80% a year ago.” 

Competition for offshore markets is heating up. Binance has faced increased competition in $BTC markets since it ended its large-scale zero-fee promotion last year. pic.twitter.com/TM2zhzRd6E

— Kaiko (@KaikoData) April 23, 2024

The competition for offshore markets has intensified as smaller exchanges leverage this shift to expand their presence. Bybit, a relatively new player in the spot trading arena, has seen its market share grow from 2% to 9.3%, while OKX’s share jumped from 3% to 7.3%.

The effect of Binance’s reduced market share isn’t limited to Bitcoin. A similar, albeit less pronounced, trend is being observed in the altcoin markets.

“Binance’s share of the top 30 altcoins has decreased from 58% to 50%,” as Kaiko Data notes. 

Bybit once again has emerged as a key winner, with its market share increasing from 3% to 8%.

Binance’s Revised Promotion Structure

Binance has announced changes to its FDUSD Zero Trading Fee Promotion, impacting regular and VIP 1 users. Starting April 25, 2024, standard taker fees will apply to regular and VIP 1 users when trading selected FDUSD spot and margin trading pairs. 

While VIP 2-9 users and Spot Liquidity Providers will continue to enjoy zero trading fees, the trading volume of these pairs will count toward regular and VIP 1 users’ VIP tier volume calculation.

Bitcoin Network Fee Surge

While market share shifts are one aspect of the changing landscape, another significant development has been the surge in Bitcoin network fees. Average transaction fees on Bitcoin reached an all-time high of $146 over the weekend, compared to Ethereum’s average fee of $3. 

This surge caught many market participants by surprise, despite warning signs from the launch of Runes, a protocol allowing easier issuance of fungible tokens on Bitcoin.

As the competition among offshore markets is heating up, Binance’s reduced market share in Bitcoin and altcoin markets highlights a shift in the crypto landscape. 

Smaller exchanges are gaining momentum as trading volumes are recovering, and the impact of new protocols and promotions will continue to influence market dynamics.