After the first month of 2024, centralized exchanges (CEX), the most profitable sector in the crypto asset market, also submitted the most comprehensive data for the whole year.
According to TokenInsight's "Crypto Exchange 2023 Annual Report", DeFiLlama, and CoinGecko data, in 2023, the world's top 10 cryptocurrency exchanges contributed US$34.26 trillion in annual trading volume, a decrease of about 16% from 2022. Among them, Binance ranked first in annual spot and derivatives trading volume, and OKX and Bybit ranked second and third respectively.
In terms of market share, Binance has decreased from 54.2% at the beginning of the year to 48.7%. Although it has dropped by more than 5%, it still maintains its dominant position. OKX accounts for 16.1% and Bybit accounts for 12.3%. Both of them have increased compared with the beginning of the year, but the total is still less than Binance. KaikoData data shows that in the past two months, Binance's market share has recovered to 49%.
Judging from the changes in trading volume and net capital inflow data, the decline in Binance's share is closely related to the law enforcement actions of Binance and other regulatory authorities such as the U.S. SEC and the Department of Justice. In particular, since it reached a settlement with the U.S. Department of Justice and was fined $4.3 billion on November 21 last year, it has experienced net outflows for 13 consecutive days, with a total of $2.865 billion "leaving" Binance.
There are always voices from outside that worry whether Binance’s “family assets” are still strong.
On December 4, funds flowed back into Binance. In December last year and January this year, when expectations for Bitcoin ETF were high, Binance's net inflow reached 5.4 billion US dollars, and its "lost ground" was recovered. The total asset value of Binance addresses on various chains reached 80.9 billion at the end of January, an increase of 28.25% over the same period last year. Both in terms of size and growth, it ranked first among all companies.
The data performance has stabilized Binance's internal and external "morale" to a certain extent. The market foundation that it has continuously accumulated over the past six years has not been easily shaken. It also complements the overall rise of the crypto asset market in the past two months. However, this "world's number one" has not relaxed and has maximized its "desire to win" in attracting and retaining users.
Binance still ranks first in CEX industry in multiple indicators
Two months have passed since Binance reached a settlement with the U.S. Department of Justice. In addition to the impressive $4.3 billion fine, the U.S. Department of Justice used the term "world's largest" to describe the platform, without even adding "one of the largest". This does not rule out the possibility that the higher the regulatory position, the greater the responsibility, but the impression of "world's largest" is not an exaggeration.
In the past 2023, Binance is still the cryptocurrency trading platform with the largest market share. Although this figure has dropped from 54.2% at the beginning of the year to 48.7%, in TokenInsight's "Crypto Exchange 2023 Annual Report", this figure is still close to half. The remaining 51.2% is shared by 9 mainstream cryptocurrency trading platforms, of which only 3 have a market share of more than 10%.
Since Mt.Gox opened the crypto asset exchange business in 2010, the rise and fall have become the eternal theme here, and the protagonists have always been the protagonists. The most noticeable change in the pattern by Chinese users is the "three major" that were often mentioned in the past. Now, "B" and "O" are still there, and "H" is being replaced by the new "B".
TOP3 refers to the order, and the current top three have a big gap between the second, third and first data.
Taking trading volume as the dimension, we sorted out the data entered by Coingecko (the first 11 months of 2023 and January 2024). In the spot market, Binance's trading volume was 3.77 trillion US dollars, OKX was 0.54 trillion US dollars, and Bybit was 0.43 trillion US dollars. The sum of the two was less than 1/3 of Binance; CEX's derivative trading contributed more considerable trading volume to the market, with Binance at 14.32 trillion US dollars, OKX and Bybit at 4.96 trillion US dollars and 3.69 trillion US dollars, respectively.
Taking the total value of assets (TVL) in the addresses of each chain as the dimension, DeFiLlama data shows that as of January 31, Binance's total asset value was US$80.9 billion, OKX ranked second with US$15.5 billion, and Bitfinex ranked third with US$13.7 billion. The gap is still several times.
Binance and OKX both had monthly capital inflows of over 1 billion U.S. dollars, which is quite considerable. Among the subsequent exchanges, six exchanges had monthly capital inflows of over 100 million U.S. dollars, including Robinhood and Bybit.
Turning from negative to positive, Binance has inflows of over $5 billion in two months
Judging from the data, the TVL in the Binance address remained relatively stable throughout 2023, remaining around US$60 billion, with high liquidity in and outflows.
In June and September last year, Binance’s TVL experienced two relatively obvious declines, falling to US$58.8 billion and US$58.1 billion respectively, and the US dollar value also outflowed by US$3.8 billion and US$1 billion in these two months respectively.
The two declines were somewhat related to regulatory/partner actions. In June, the US SEC sued Binance for selling unregistered securities, and in September, Binance's Euro banking partner Paysafe terminated the cooperation between the two parties.
It can be seen that it is difficult for external situations not to affect Binance users' operations on whether to keep or leave funds, and funds often flow back in a month after outflow. The event that made Binance's name widely appear in the media headlines was the settlement with the US Department of Justice on November 21 last year. After that, funds flowed out of Binance for 13 consecutive days. Throughout November, a total of US$1.635 billion in funds were indeed shown as outflows on the chain.
Interestingly, Binance’s TVL has continued to increase during this period, from $64.6 billion in October to $67 billion in November. It’s hard not to envy Binance’s resilience.
In December and January of this year, Binance's TVL broke the previous high, reaching US$79.6 billion and US$80.9 billion, respectively, up 18.80% and 20.74% from November; the TVL in January increased by 28.25% compared with the same period last year; December and January once again continued the "outflow followed by inflow" pattern, and the US dollar value in two months turned from negative to positive from November, with inflow values of US$3.113 billion and US$2.359 billion respectively; in these two months, Binance's market share also rose to 49%.
After entering 2024, the impact of the US Department of Justice's punishment on Binance is weakening, which is reflected not only in the retention of funds in Binance, but also in the trading volume.
In the past two months, Binance has maintained its leading position in the spot market and derivatives market trading volume. According to CoinGecko data on February 1, Binance's spot trading volume in 24 hours was US$14.872 billion, exceeding the average daily trading volume of US$10.332 billion in the past 12 months; the derivatives trading volume in 24 hours was US$39.719 billion, while its average daily derivatives trading volume in the past 12 months was US$39.246 billion.
External market support and internal "survival desire"
Faced with the adverse impact of "the largest fine in the history of U.S. financial regulation", Binance has indeed demonstrated the resilience of its foundation in the cryptocurrency trading market after being established for 6 years. This "obstacle" seems unlucky, but also very lucky.
In the two months after the U.S. Department of Justice reached a settlement with Binance, expectations for the launch of a Bitcoin ETF grew. These two months were also the period when Binance's total trading volume continued to break through upward, reaching $1.95 trillion and $1.93 trillion, respectively.
Some analysts even believe that the resolution of the entanglement between the world's largest crypto asset exchange and the regulatory authorities with criminal powers will help accelerate the passage of the Bitcoin ETF. The causal logic is a matter of opinion, but at least in terms of chronological order, things did develop in this way.
On November 21 last year, the U.S. Department of Justice reached a settlement with Binance; on January 10 this year, the Bitcoin ETF was approved. In December and January, Bitcoin reached two recent highs of $44,000 and $48,000 respectively. The funds retained and trading volume in Binance also rebounded significantly in these two months.
In the past 12 months, Binance's highest trading volume occurred in March last year, when the spot trading volume was US$559.47 billion, the derivatives trading volume was US$1750.73 billion, and the total monthly trading volume reached US$2310.2 billion. If the total trading volume in February last year and January this year is compared, it is already the second highest in the past 12 months.
Although the outflow of funds from Binance in November gave other competitors an opportunity to share the market share, the market situation has given Binance the support to maintain its basic market. At the same time, the platform is also struggling to "defend its territory."
In the competitive leading situation, this real "world number one" still has a strong desire to survive, or it is highly sensitive to attracting and retaining users. The most perceptible to the outside world is the action of Binance Launchpool's new coin mining section.
This product has always been regarded as the "most wealth and traffic effect". In January 2024 alone, Binance Launchpool's new coin mining section launched 4 projects, while in 2023 there were 10 projects and in 2022 there were only 5 projects. Binance retains $5 billion to $6 billion in funds in a short, frequent and fast manner, with about 200,000 participants in each period.
After Binance, other platforms also began to accelerate the launch of new shares in similar sectors. For holders of crypto assets, competition between trading platforms is always welcome. Binance can still maintain its lead in adversity, which makes people look forward to what "big moves" it can make in the future to attract users and funds.
In 2024, the regulatory authorities will continue to influence crypto asset exchanges, and the competition in the CEX track will continue. Over the years, the CEX landscape has been changing, and the rise, decline, and disappearance will still happen every year. It is not difficult to find that in the face of users and the market, those platforms that always maintain a desire to survive and awe can become long-distance runners on the track. As long as the crypto asset market is expanding, the end will never end.
(Disclaimer: Please strictly abide by the laws and regulations of your location. This article does not represent any investment advice)
