Binance, the world’s largest cryptocurrency exchange, continues to be the leader in the space with 66.7% market share by the end of 2022, compared to 48.7% at the beginning of the year.
According to a CryptoCompare report, Binance accounted for 66.7% of all centralized cryptocurrency exchange trading volume in the fourth quarter of 2022 after the collapse of one of its biggest rivals, FTX. By comparison, the platform had a 48.7% market share at the beginning of 2022.
Binance’s rise in market share came despite the platform’s spot trading volume dropping by more than 45% amid a general market downtrend. “OKX and Coinbase traded at $813 billion and $805 billion respectively, followed by market shares of 8.58% and 8.50%,” the report added.
The report analyzed a total of 11 exchanges including Binance, FTX, Coinbase, Kraken, Bitfinex, Bittrex, Bybit, Crypto.com, Huobi, Kucoin and OKX. Of this list, he was the only one with an increase in trading volume in 2022: Bybit and Kucoin. Bybit also he will grow market share in 2022.
“This increase can be attributed to industry consolidation as industry-wide trading volumes are trending downward and exchanges are competing for lower trading volumes,” the report said.
In fact, Binance’s move to remove trading fees on its BTC and ETH pairs in 2022 has seen a significant surge in trading volumes, with Coinbase, FTX, Huobi, Okex, and more through mid-September.
US-based cryptocurrency exchange Coinbase has become the second largest platform with 8.2% market share by the end of 2022, up from 10.1% at the beginning of the year. Also behind Coinbase is OKX, whose market share was 5.9% in December, compared to 10.7% in early 2022.
Meanwhile, the cumulative trading volume of centralized exchanges fell by 46.2% in 2022. Falling cryptocurrency prices and lower volatility are some of the main factors affecting the decline in trading volumes. The report states:
“One of the biggest signals of a lack of participation is declining market volatility and liquidity. Lowest since July 2020, reflecting avoidance market sentiment.”
The report called 2022 a “transformation year” for the digital assets sector, with events like the collapse of FTX and Terra highlighting the industry’s flaws. On the one hand, such events demonstrate the benefits DeFi can bring through transparent and permissionless infrastructure, the report says.