Data from research firm Kaiko shows that Binance lost significant market share in the spot trading of digital assets after the exchange discontinued its zero-fee campaign. The development has instead benefited rival businesses such as Huobi and OKX.
Binance boasted a whopping 73% spot trading dominance before the zero-fee campaign was almost eliminated. After the announcement, the exchange’s spot trading share fell to 51% by May 6. Meanwhile, Huobi’s share increased to 10% from 2%, and OKX went up to 9% from 5%. According to the Kaiko data, South Korean firms also saw an increase in their share. As per the firm, South Korean firms went from just under 8% to almost 14%.
Is Binance losing its stronghold?
Changpeng Zhao, the founder of Binance, may face new difficulties as a result of the upheaval. His company is dealing with escalating regulatory pressure, particularly in the U.S.
Users are now concerned about the security of their payments as a result of the U.S. crackdown. According to Cici Lu, the founder of Venn Link Partners, the adjustment has caused consumers to diversify into other centralized exchanges. Zhao has tweeted numerous times to reassure customers that their money is secure. After the crypto crash and the collapse of FTX last year, there is little trust in the digital asset market.
A spokeswoman for Binance claimed that the market share decline wasn’t as significant as some of their models had shown. In order to get ready for a new era of regulatory certainty, the representative said that “our primary objective right now is to mature our existing products and services.”
The spokesperson further added that the company will continue to invest in its “compliance processes to prepare for a new era of regulatory certainty.” The crypto market is still recovering from its 2022 losses. Although significant gains have been made this year, volumes and liquidity are still low since many investors have left the market. However, with macro factors seeming to cool down, many anticipate that the crypto market will gather steam sometime later this year.