Noise about a spot Bitcoin ETF approval has put Bitcoin and other digital assets a much-anticipated lift. But aside from asset prices, other areas of the crypto world haven’t fared so well, according to a new report.
According to CoinGecko, spot trading volume took a hit in the third quarter with Binance, the world’s largest exchange and one of the industry’s dominant forces, being one of the biggest losers.
The crypto exchange landscape saw some major shifts in the third quarter of 2023. Spot trading volume across the top 10 centralized crypto exchanges dropped 20.1% from the previous quarter to $1.12 trillion. Whilst many are predicting a thaw, the ongoing crypto winter continues to chill trading activity.
The biggest story was the decline of market leader Binance. Its market share plunged to a yearly low of 44% in September, down significantly from a peak of 66% in February.
It’s been a stormy period for Binance as regulators across the world put pressure on the exchange. Binance has been forced to cease operations in multiple jurisdictions, including the UK where it recently pulled out due to new marketing rules around crypto assets. At the same time, some of its top executives have left the company, prompting fears of impending trouble.
Separate data released from CCData on October 5 showed Binance’s grip on the crypto exchange market continuing to loosen as regulatory troubles mount. For the seventh straight month, the exchange saw its market share decline in September.
According to their September report, spot trading volume on Binance plummeted 36.9% to $115 billion last month. This marked the platform’s lowest monthly volumes since October 2020 and the third consecutive volume drop since June. Binance’s market share among spot exchanges sank to 34.3%, the lowest level since June 2022.
The volume slide accelerated after Binance halted its zero-fee trading promotion for Bitcoin-Tether pairs in September. This move likely drove traders to rival exchanges offering similar incentives.
Meanwhile, derivatives volumes on the leading exchange dropped 20.8% to $686 billion in September, the lowest since December 2020. Although Binance still dominates derivatives with a 51.5% market share, its dominance has fallen to the lowest level since March 2022.
Although, Binance is still spared the stress of worrying too much about its major competitors. According to figures from Similarweb on CoinGecko’s website, Binance is still by far the most-visited exchange with approximately 43.9M monthly visitors, compared to 26.4M for Coinbase and 22.4M for OKX. Binance also has nearly quadruple their normalized trading volume, at the time of writing.
While Binance stumbled, some exchanges gained ground. The CoinGecko report showed Huobi Global, now rebranded as HTX, re-entered the top 10 exchanges by trading volume after being absent for a while. Its trading volume soared nearly 87% in Q3 as it grabbed 8% market share. Upbit and Bybit also saw modest gains in market share during the quarter.
However, despite Huobi Global’s (now HTX) incredible success, it entered the fall with a long list of things to worry about. On October 8, it found itself on the UK Financial Conduct Authority’s warning list, alongside KuCoin, another exchange, and other digital asset firms.
On October 8, the UK’s rules for financial promotions expanded to encompass cryptoasset service providers, regardless of their location. Hence, all crypto platforms had to comply with new regulations, such as displaying clear risk warnings to UK-based consumers and meeting higher technical standards.
In response to these violations, the FCA issued a generic warning, telling UK consumers to steer clear of the exchange: “This firm may have promoted financial services or products without our permission. You should avoid dealing with this firm.”