The activities in the crypto market have decreased over the past few months as most traders and investors lost interest due to the summer slump in the price of major cryptocurrencies.
The worldwide crypto market is still dominated by bears. According to data from CryptoCompare, a crypto market data provider, trading volumes in top-tier exchanges fell more than 40% in June.
Volatility returned to the crypto market in August, as top cryptocurrencies by market cap, Bitcoin and Ethereum, closed at $20,050 and $1,554, falling by 14% and 7.47%, respectively. This volatility was visible that same month, as spot trading volume on centralized exchanges jumped 36.8% to $1.91 trillion.
A report from CryptoCompare revealed that Binance, one of the world’s leading cryptocurrency exchanges, witnessed 55.1% of the total spot volume market share in August, as most exchanges continued to maintain their market dominance. Thus, Binance topped the list in terms of volume and hit a new market share record since 2017.
Binance Dominance
In 2021, Binance’s cryptocurrency hit a market cap of more than 90 billion, despite being worth less than 7 billion the previous year. This rally places it among the top three cryptocurrencies with the highest market caps.
(Source: Statista)
“Binance’s growth at a time the crypto market is contracting is a testament to the confidence it inspires in its users,” says CryptoMonday Chief Executive Officer (CEO) Jonathan Merry.
He insisted that: “Binance’s dominance is due in part to its low fees, a wide range of altcoins, and strong security measures.” Besides, it’s also one of the few exchanges that allow P2P trading, making it the go-to exchange for many cryptocurrency traders. “
From Reward Token in 2017 to An Ecosystem
Binance Coin, often known as BNB, was first introduced as an addition to the Binance.com trading platform, one of the best cryptocurrency exchanges in the world. Previously, it operated as an ERC-20 token on the Ethereum blockchain network, providing owners with benefits including lower trading fees, rewards, or a launchpad that allowed users to participate in some Binance-selected cryptocurrency projects.
But in 2019, BNB transitioned away from the Ethereum network onto Binance’s blockchain. Binance Smart Chain (BSC), formerly known as this blockchain, has been renamed “BNB Chain” as of February 2022. BNB initially supported a chain that was more concerned with having a quick transaction speed and the ability to manage large amounts of traffic than it was with hosting decentralized applications.
Trading Volume
A simple look at the chart below, which plots daily top-tier spot exchange volume over the past few months, emphasizes Binance’s lead over other exchanges.
The data showed that the total spot trading volume increased 36.8% to $1.91 trillion over the past few months, due in part to the increased use of automated trading strategies such as Binance trading bots. Top crypto exchanges also witnessed a 41.6% to $1.8 trillion increase in spot trading volumes, while the spot volumes of lower crypto exchanges decreased 12.3% to $108 billion.
The top-tier exchanges dominated the market share, with up to 94.3% of the overall spot volume traded. This was the highest market share recorded since November 2017.
Following Coinbase ($58.3 billion) and AAX ($54.9 billion), Binance continued to be the largest top-tier spot exchange by volume, with $438 billion in trades. Binance’s continued market dominance allowed traders and investors to be more active despite extended periods of market volatility.
Also Read: Why Americans Choose Coinbase Over Other Crypto Exchanges
Derivative Volumes
Historically, derivative trading has dominated the total volume of crypto trading. August saw an increase in derivative trading volumes by 1.91% to $3.16 trillion, marking the first gain in three months.
The market share of derivatives has been experiencing a decline due to rising inflation and a looming recession around the world. Despite the Fed’s announcement of its commitment to controlling inflation, the price movement indicated a significant sell-off of spot-holding positions by most investors. Spot holdings experienced a significant sell-off.
The derivative volume graph of Binance against FTX shows how Binance has dominated the market share and remained the number one exchange by volume and the most-preferable exchange as well.
(Source: Invezz)
Native Token
A simple peek at their native token is required to compare the performance of top-tier exchanges. The price of Binance’s native token, BNB, grew by 50% in late 2021, while 2022 saw significantly slower growth.
BNB reached an all-time high of $690.93 in May 2021 but fell to around two-thirds of that price by March 2022. Despite this, BNB was among the most expensive cryptocurrencies in 2022.
(Source: Statista)
Binance’s token (BNB) has dramatically outperformed Coinbase since it went public in April 2021. The Coinbase native token, COIN, went down 82%, while BNB saw a 52% decline. It’s interesting to note that BNB outperformed Bitcoin at the same time.
On the other hand, when comparing returns from FTX’s exchange token FTT, launched in July 2019, and BNB, launched in November 2017, it can be seen that both exchanges’ tokens have greatly beaten Bitcoin. BNB has increased by 900% and FTT by 1268%, while BTC has only increased by 100% throughout the same period.
The key to Binance’s dominance in the market share has been its focus on user experience. Both new and experienced traders find Binance’s interface to be straightforward and user-friendly. Additionally, Binance is renowned for its robust security and fast transaction speed.
UpBit, the South Korean crypto exchange platform, maintained its position as the second-largest exchange by market share, with a 9% market share.
The third-largest CEX, FTX, also saw an increase in market share in June. The exchange’s 8% market share represented a marginal increase from the 5% it had during the majority of the first quarter of 2022.
After ending June with a mere 5% market share, OKX had the lowest performance of any CEX during the year. This represents a sharp decline from the 14% held at the beginning of the year.
Conclusion
Investors and traders were more cautious last month due to a more unexpected and volatile environment, as seen by their investing behaviors and psychology. A major cryptocurrency exchange platform in the world, Binance, claimed 55.1% of the spot volume market share in August, according to CryptoCompare research, as top-tier exchanges continued to dominate the market.
Note: This is a sponsored article, posted as received. The research behind the article was done by a third party.
