During a year plagued by crises like the collapse of FTX and Celsius, data shows that crypto exchange Binance has emerged as the clear “winner” of 2022 according to Arcane Research..
A January 3 report from Arcane noted that Binance saw its market dominance skyrocket throughout 2022. As of December 28 last year, it had captured 92% of the bitcoin (BTC) spot market and 61% of the BTC derivatives market by volume.:
“There are no other obvious ‘winners’ of 2022 other than Binance when it comes to cryptocurrency market structure and market dominance. No matter how you look at it in terms of trading activity, Binance is the crypto marketplace.”
Binance’s BTC spot market dominance was 45% in early 2022, meaning it more than doubledwhile its share of the BTC derivatives market increased by almost a third.
“Spot trading volume” is an indicator that measures the total amount of bitcoin traded on spot exchanges on a given day..
The report suggests that Binance’s rise in BTC spot market dominance preceded the crash of the second-largest exchange by volume, FTX, and began to rise after it removed fees for certain trading pairs on July 7, 2022.
The exchange also made some notable acquisitions to boost its global coverage in 2022.such as the Japanese trading platform Sakura Exchange BitCoin and the Indonesian digital currency brokerage Tokocrypto.
Binance has been one of the few exchanges that has increased the number of employees throughout the yearwhile their counterparts like Kraken and Coinbase have been forced to lay off staff during the current crypto winter.
Looking ahead to 2023Arcane predicted in a Dec. 30 report that Binance would re-implement trading fees in 2023, leading to a “normalization of market dominance”.
As noted in a Jan. 3 report by digital asset data firm CryptoCompare, removing the fees allows exchanges to attract customers, but they “must be cautious to remain profitable” and “cannot employ this strategy for long periods of time without damaging their bottom line”.
Binance could also be subject to increased regulatory scrutiny in 2023 – particularly in relation to its native BNB (BNB) token – as after In the fallout from the FTX empire there has been an increased focus on cryptocurrency regulations globally.
Bitcoin advocate Nic Carter’s analysis suggested that While Binance CEO Changpeng Zhao has been vocal about his support for exchanges providing Proof of Reserves (PoR), the PoR provided by Binance was incomplete as it “only covers bitcoin, which only accounts for 16.5% of its customer assets”.
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