Binance Dominates Bitcoin And Crypto Markets Like Mt. Gox Once Did: Research

Since the collapse of FTX, once the second-largest exchange by trading volume, the crypto landscape has fundamentally changed, and it should come as no surprise to many that Binance has emerged as the big winner from the situation. Vetle Lunde, senior analyst at Arcane Research has published a detailed analysis of this.

“No matter how you look at it in terms of trading activity, Binance dominates the crypto market,” the analyst says, further stating that the exchange led by Changpeng Zhao is the clear winner of 2022.

As the Arcane Research analyst notes, Binance captures 92% of the Bitcoin spot volume. Remarkably, the exchange occupied only 42% of BTC spot volume in January 2022. After the exchange removed trading fees on its BTC spot pairs this summer, the growth exploded.

“We have to go all the way back to Mt. Gox’s heydays to find a period where a single exchange dominated in a similar fashion,” Lunde claimed.

Binance’s Dominance Increased Across The Board

But not only the spot volume but also the perp volume puts Binance in a different league than all other crypto exchanges. According to Arcane Research, the exchange is responsible for 66% of the global perpetual swap volume of all cryptocurrencies. OKX with 16% and Bybit with 13% are trailing far behind on the next ranks.

CZ’s exchange also represented 55% of perp trading volume until November, but after the collapse of FTX, more or less all of the perp trading market share was taken by the exchange, leading to rapid and prevalent growth in market dominance, Lunde says.

With 49%, Binance is not much less dominant in global perp open interest, followed by Bybit with 23% and OKX with 20%. Similar to volumes, the exchanges’ dominance has gained the largest market share following the collapse of FTX.

Binance also holds a whopping 61% of Bitcoin perp and futures volume. This makes the dominance for BTC almost as large as for all crypto perps. Remarkably, the exchange’s market share has grown steadily throughout the year. However, it is striking that “more or less all of the market share” flowed to the exchange in November following the collapse of FTX.

In contrast, Binance’s dominance is less pronounced when it comes to the open interest of BTC perps and futures, where the exchange is responsible for 30%, followed by OKX (24%), Bybit (19%), and the CME (16%). “Nonetheless, Binance has been the market leader throughout the year maintaining a market share of 25-35% of the OI in BTC derivatives,” Lunde explained.

Apart from these stats, Binance has been able to gather other achievements in 2022, according to Arcane Research’s senior analyst. BUSD gained market share in the stablecoin industry (from 11% to 14%) and BNB outperformed BTC and ETH by a wide margin.

Moreover, Binance continued to grow its employee base while the entire industry was forced to lay off workers. As Lunde explained, the exchange was able to double its headcount while others laid off half their workforce or went bankrupt.

Meanwhile, the BNB price weakened over the past few weeks after numerous rumors about Binance worried investors. At press time, the price stabilized at $243.90.

Frequently Asked Questions

What is Binance?

Binance is one of the largest cryptocurrency exchanges globally, offering a platform for trading various digital assets.

How does Binance dominate the Bitcoin and crypto markets?

Binance's dominance stems from its extensive range of services, including spot and derivatives trading, as well as its user-friendly interface and wide selection of cryptocurrencies.

What is the comparison to Mt. Gox?

Mt. Gox was a major cryptocurrency exchange that dominated the market in the early days of Bitcoin. Similarly, Binance now holds significant influence and market share in the cryptocurrency trading world.

Is Binance considered a trustworthy exchange?

Binance has garnered trust among many users due to its security measures, robust infrastructure, and regulatory compliance efforts in various jurisdictions.

What are the risks associated with Binance's dominance?

While Binance's dominance can offer liquidity and accessibility to traders, it also raises concerns about centralization and market manipulation risks.

Does Binance face regulatory challenges?

Like many cryptocurrency exchanges, Binance encounters regulatory scrutiny in various countries, which could impact its operations and market dominance.

How does Binance maintain its competitive edge?

Binance continuously innovates by introducing new features, expanding its product offerings, and forging strategic partnerships to stay ahead in the competitive cryptocurrency market.

What alternatives exist to Binance?

While Binance is prominent, there are other cryptocurrency exchanges such as Coinbase, Kraken, and Huobi that offer similar services and cater to different user preferences.

Can Binance's dominance change in the future?

The cryptocurrency market is dynamic, and Binance's dominance may evolve due to regulatory changes, technological advancements, or shifts in user preferences over time.

How can users mitigate risks when using Binance?

Users can mitigate risks by practicing good security habits, such as enabling two-factor authentication, conducting thorough research before trading, and staying informed about regulatory developments affecting Binance and the broader cryptocurrency industry.

Conclusion 

Highlights the significant influence of Binance in today's cryptocurrency landscape, drawing parallels to the dominance once held by Mt. Gox. Binance's comprehensive range of services, user-friendly platform, and expansive selection of cryptocurrencies have propelled it to the forefront of the industry. However, this dominance also raises concerns about centralization and regulatory challenges, echoing the issues faced by Mt. Gox in its time. 

As the cryptocurrency market continues to evolve, it remains essential for users to remain vigilant, informed, and proactive in navigating the opportunities and risks associated with platforms like Binance. Ultimately, the future of Binance's dominance will depend on its ability to adapt to regulatory changes, innovate, and maintain trust among its users in an ever-changing landscape.