Headline: Binance’s dominance under pressure — spot share tumbles to 25% as rivals and on-chain platforms chip away Binance, the world’s largest centralized crypto exchange, is facing a pivotal moment as its grip on spot and derivatives trading loosens. Data from Bitcoin Sistemi shows Binance’s share of global spot volume slid to just 25% in December — the lowest since January 2021 — down from 28.5% in November and well below its roughly 60% peak in 2023. Its derivatives market share has similarly shrunk from about 70% at the high to roughly 35% today. The shift highlights a broad rebalancing across the industry. Spot trading — where assets change hands directly — makes up only a portion of a roughly $3.2 trillion crypto market, with derivatives (notably perpetual futures) accounting for the lion’s share of activity. Even as Binance remains the largest centralized venue for both spot and derivatives, analysts say the declines point to intensifying competition and a structural change in where and how market participants trade. Where the volume is going Research analyst Jacob Joseph notes much of Binance’s lost volume is migrating offshore rather than to U.S.-based platforms. Exchanges such as Bybit, HTX and Gate have been notable beneficiaries, while Coinbase has captured only limited gains among American venues. At the same time, next-generation, on-chain trading solutions like Hyperliquid are carving out increasing market share in derivatives trading — a trend Joseph says suggests a lasting market evolution rather than a temporary swing. U.S. dynamics and alternative liquidity A relatively friendlier U.S. regulatory tone has supported domestic crypto activity, but it hasn’t translated into major increases in reported centralized-exchange volumes, analysts say. CoinDesk Data points out that U.S. trading is increasingly driven by institutions and that more transactions are occurring off-exchange — via OTC desks and other non-exchange channels — which don’t necessarily boost reported exchange volumes. How Binance built — and is retooling — its dominance Binance’s rise to market dominance took place through a combination of aggressive pricing and market dislocation. The exchange launched a zero-fee spot campaign in July 2022 amid the fallout from the TerraUSD collapse and later consolidated share after rival FTX went bankrupt, driving spot market share toward 60% at the peak. That zero-fee push ended in 2023. Facing a more fragmented landscape, Binance has made management and strategic moves. Co-founder Yi He was recently named co-CEO — the biggest internal leadership shift since Changpeng Zhao stepped down two years ago — and analysts say a presidential pardon for Zhao in October may ease certain regulatory headwinds and help the company shore up U.S. operations. Binance has also pursued regional regulatory footprints, securing three licenses from the Abu Dhabi financial regulator. Bottom line Binance is no overnight casualty — it remains the largest centralized exchange — but the exchange is navigating a make-or-break phase. Market share erosion to offshore competitors, rising on-chain alternatives, and shifting liquidity channels point to a more competitive and structurally different trading ecosystem. How well Binance adapts with regulatory alignment, product innovation and regional strategies will determine whether it can reclaim lost ground or cede further terrain to rivals. Read more AI-generated news on: undefined/news

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