In the first quarter of 2025 (Q1), the cryptocurrency market failed to continue the growth trend seen at the end of 2024, with the total market capitalization dropping from a peak of $3.8 trillion to about $2.7 trillion, returning to the level of the first quarter of 2024. Bitcoin (BTC), which leads the market capitalization, hit a historic high (ATH) of $109,000 on January 20 this year, but closed the quarter at $82,000.
However, in Q1, the total trading volume of the world's top ten exchanges was $21.69 trillion, an increase of 16.84% compared to the same period last year, but a decrease of 12.29% compared to the previous quarter. Binance led the way with a total trading volume of $8.41 trillion, followed closely by OKX and Bitget with $3.06 trillion and $3.01 trillion, respectively.
However, at the beginning of Q2, Trump's tariff policy was first implemented and then paused, causing significant fluctuations in global stock markets and cryptocurrency assets.
Liquidity risk will present growth challenges for cryptocurrency trading platforms, with leading platforms evidently having greater risk resistance. Binance welcomed a $2 billion equity financing from Abu Dhabi's state-owned institution MGX in the first quarter, preparing its 'resources', along with the upgrade of its Web3 product Alpha and adjustments to its listing mechanism, laying groundwork for future market changes.
An unstable start to Q2 has filled the market with uncertainty, directly testing the long-distance resilience of trading platforms at the top of the industry.
Q1 trading volume shrank year-on-year while the scale of derivatives trading expanded.
After Bitcoin's price peaked, it fell, foreshadowing a contraction in cryptocurrency trading volume for Q1 2025, with the top ten exchanges generating $21.69 trillion in trading volume, down 12.29% from $24.73 trillion in Q3 2024, but up 16.84% compared to $18.25 trillion in the same period last year.
Accordingly, the spot trading volume and derivative trading volume contributed by the TOP 10 exchanges both declined compared to the previous quarter, amounting to $4.94 trillion and $16.75 trillion, a decrease of 14.97% and 11.52% compared to Q4 2024, respectively.
In Q1, the total trading volume of the cryptocurrency derivatives market was 3.39 times that of the spot market, with a scale increase from 3.26 times in the previous quarter. The top platforms Binance, OKX, Bybit, and Bitget accounted for over 80% of the derivatives trading volume.
Despite the overall decline in trading volume in Q1, Binance still maintained its leading position with a total trading volume of $8.41 trillion, holding the largest share in both the spot and derivatives markets, accounting for 41.06% and 38.08%, respectively, with an overall market share of 38.8%.
In Q1 2025, Binance dominated the trading volume.
Compared to the spot market in Q1, derivatives remain the core source of revenue for most trading platforms, with trading volume expanding further, being 3.39 times that of the spot market. Although the top platforms hold the majority share, competition is intensifying, especially as the spot market shrinks, and downstream platforms are likely to start competing for market share.
In the derivatives market, Crypto.com is at a disadvantage, with its spot trading volume share (11.46%) significantly higher than its derivatives (3.87%), while Coinbase's derivatives trading business, only configured on the international site, remains relatively weak (4.8%), although it has significantly increased from 2.72% in the previous quarter.
Derivatives are the core source of revenue for most trading platforms.
Compared to Q4 2024, Binance's spot share slightly decreased but still holds an absolute advantage (over 40%); Crypto.com’s spot share significantly declined, while Gate.io is one of the few platforms to see an increase.
In the first quarter, compared to altcoins, Bitcoin's spot market share and trading volume were both dominant, and the data from various trading platforms reflects this.
Binance holds a leading position in both Bitcoin and altcoin spot trading volumes.
According to CryptoQuant data, Binance's trading volume in Bitcoin and altcoins is significantly leading. Due to a decline in spot trading volume across the entire cryptocurrency industry, Binance's share of daily Bitcoin spot trading volume increased from 33% to 49%, while from February 3 to the end of the first quarter, the average daily spot trading volume share of altcoins increased from 38% to 44%. This also indicates that the trading volume decline rate of other exchanges is much faster than that of Binance.
In the derivatives market, the top four platforms - Binance, OKX, Bybit, and Bitget - saw their total market share decrease from 87.06% to 83.13%. The share of mid-sized exchanges slightly rebounded, with Binance experiencing the largest decline in derivatives share, yet it still retains the top position, followed closely by Bybit and Bitget, indicating intensifying competition.
Binance's trading volume market share has declined but still maintains the top position.
Despite Binance's overall market share declining by 1.38% compared to 2024, it still maintains an absolute lead, with other major platforms failing to benefit significantly from this, and a more apparent signal compared to competition is that the overall cryptocurrency market is contracting, thus the industry has entered an adjustment period.
External financing and internal upgrades are preparing Binance for growth.
At the beginning of April, Trump's new tariff policy severely impacted the cryptocurrency market, casting a shadow over the just-started second quarter, and testing the resilience of the market and the industry. Throughout the first quarter, Binance continued to be the most active player in the cryptocurrency exchange industry, with several significant events adding substantial leverage in facing future uncertainties.
The most attention both inside and outside the industry is undoubtedly on Binance's first institutional financing.
On March 12, MGX (Mubadala G42 X), a technology investment company supported by the Abu Dhabi government, announced a $2 billion investment in Binance, the world’s largest cryptocurrency exchange, acquiring a minority stake. This is MGX's largest single investment in a cryptocurrency company.
The market speculates that Binance's valuation will rise to $20-40 billion as this investment will directly strengthen its balance sheet, making it the cryptocurrency exchange with the largest cash reserves globally. However, with nearly $100 billion in daily trading volume, Binance's intention for this deal is not financial — the deep governmental background of MGX has significantly enhanced the 'value' of this institutional investment in Binance.
Behind MGX is the combination of Abu Dhabi's sovereign wealth fund Mubadala and AI giant G42 Group. If 'G42' represents the technology core, then 'Mubadala' signifies wealth and power; this 'M' is one of the world's top ten sovereign wealth funds, managing assets exceeding $300 billion. Its CEO, Khaldoon Al Mubarak, is also the vice chairman of MGX, reporting directly to the Abu Dhabi royal family and participating in formulating national industrial transformation plans.
With the UAE 'state capital' backing and sovereign funds endorsing, Binance, which has already obtained a virtual asset service provider (VASP) license in Dubai, will further increase its compliance leverage and will to some extent influence the world's perception of the cryptocurrency industry.
Furthermore, Binance will leverage its foothold in the Middle East to overcome capital limitations. It is worth noting that Middle Eastern family offices manage approximately $18 trillion in assets; if Binance is included in the whitelist, it is estimated that it will bring over $50 billion in incremental funds within the next 12 months.
In the long term, the cooperation between Binance and MGX may open a new path for the industry — becoming a 'digital central bank' connecting oil capital and the cryptocurrency world, redefining the global financial power structure. After this battle, Binance will evolve from a cryptocurrency exchange to a new financial infrastructure institution, bringing new opportunities for its upgrade and transformation.
In addition to external factors, a series of internal reforms at Binance after the start of this year is clearly preparing for future upgrades and market changes.
On March 18, Binance Alpha 2.0 launched, directly integrating its Web3 wallet trading functionality into the main platform. This is a significant upgrade, as Alpha 2.0 simplifies the entry for early token trading, allowing users to purchase newly launched tokens on-chain directly on the Binance main site without additional setup, facilitating better opportunities for users to explore early projects.
In terms of security, Alpha 2.0 also introduced 'MEV protection', which is a feature that enhances trading security and provides better pricing for traders, helping to reduce risks associated with market manipulation and front-running, thus providing safer and more efficient trading conditions.
On the day Binance Alpha 2.0 launched, the on-chain trading volume of Binance wallets reached $90.55 million, accounting for 54% of the Web3 wallet market's trading volume, which is 0.2% of Binance's average daily spot trading volume, already more than twice the spot trading volume of CEX Deribit, which ranks 70th in the spot trading market.
This means that Alpha 2.0 will become a supplement to Binance's spot trading market. When the market is down and overall trading volume is weak, early projects in the on-chain Web3 market may still attract users due to low market capitalization and high liquidity, and some active and quality projects may have the opportunity to list on the Binance main site, continually increasing user activity on the platform.
Aside from products, in the first quarter, Binance also reformed its governance structure, incorporating 'user voting' into the rules for asset listings and delistings to enhance user influence in the listing of new coins and the delisting of old coins. This is also one of the moves Binance has continuously made since the beginning of the year to listen to user feedback and adjust its 'listing mechanism', becoming a small tool to maintain its activity.
Seeking strategic layout through external financing and innovating internally to respond to the ever-changing market, Binance, which has become a giant after seven years of ups and downs in the 'currency sea', continues to leverage and seek change. The iron law of the exchange industry 'no advancement is a retreat' has overturned many 'new ships', especially as all industries enter an era of significant economic turbulence, where 'light' only belongs to those who constantly accumulate strength as 'long-distance runners'.
(Disclaimer: Readers are advised to strictly comply with local laws and regulations; this article does not constitute any investment advice.)
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