Implementing zero-fee BTC transactions and some notable global acquisitions Binance’s market dominance soared throughout 2022 under the influence of FTX.
In a year plagued by crises such as the FTX and Celsius crashes, data shows that cryptocurrency exchange Binance has emerged as the clear "winner" in 2022, according to Arcane Research.
Arcane highlighted in a Jan. 3 report that Binance will witness a surge in its market dominance throughout 2022. As of December 28 last year, it had acquired 92% of all bitcoins 61% of spot market and BTC derivatives market by volume: “In terms of cryptocurrency market structure and market dominance, there is no clear ‘winner’ in 2022 other than Binance. Binance is the cryptocurrency market from any trading activity perspective.”
By early 2022, Binance’s dominance of the BTC spot market is 45%, which means it has more than doubled, while its share of the BTC derivatives market has increased by almost a third. "Spot volume" is a measure of the total amount of bitcoin traded on spot exchanges on any given day.
The report suggests that the increase in Binance’s BTC spot market dominance predates the impact of FTX, the second-largest exchange by volume, and began to spike after fees were removed for certain trading pairs on July 7, 2022.
The exchange has also made some notable acquisitions to expand its global reach in 2022, such as Japanese trading platform Sakura Exchange BitCoin and Indonesian digital currency broker Tokocrypto.
Binance is one of the few exchanges to increase headcount over the past year, while peers like Kraken and Coinbase have been forced to lay off staff during the current crypto winter. Looking ahead to 2023, Arcane predicted in a Dec. 30 report that Binance would implement transaction fees again in 2023, which would lead to a “normalization of market dominance.”
As digital asset data firm CryptoCompare noted in a Jan. 3 report, removing fees allows exchanges to attract customers, but they "must be careful to remain profitable" and "cannot do so in the long-term without hurting their bottom line." adopt this strategy." Binance could also come under heightened regulatory scrutiny in 2023 especially related to its native token BNB. Global focus on crypto regulations grows as FTX empire wanes.
Analysis by Bitcoin advocate Nic Carter suggests that while Binance CEO Changpeng Zhao has been expressing his support for exchanges offering Proof-of-Reserve (PoR), the PoR offered by Binance is incomplete because “it only covers Bitcoin.” , representing only 16.5 percent of their client assets.”
