During a year of crises such as the collapse of FTX and Celsius, data shows that the crypto exchange Binance has emerged as a clear “winner” in 2022 according to Arcane Research.
A January 3rd report from Arcane stated that Binance sees market dominance rising throughout 2022. As of December 28th last year, it held 92% of the Bitcoin (BTC) spot market and 61% of the BTC derivative market by volume:
“There is no other clear ‘winner’ in 2022 except Binance when it comes to crypto market structure and market dominance. No matter how you look at trading activity, Binance is a crypto market.
Binance’s BTC spot market dominance was 45% at the start of 2022 meaning it more than doubled, while BTC derivatives market share increased by almost a third.
“Spot trading volume” is an indicator that measures the total amount of Bitcoins transacted on the spot exchange on a given day.
The report shows the increase in dominance of Binance’s BTC spot market before the event of the second largest exchange by FTX volume, and began to increase after the removal of fees for certain trading pairs on July 7, 2022.
The exchange has also made several important acquisitions to boost its global reach by 2022 such as Japanese trading platform Sakura Exchange BitCoin and Indonesian digital currency brokerage Tokocrypto.
Binance has been one of the few exchanges to increase the number of staff employed during the year while its peers such as Kraken and Coinbase have been forced to lay off staff during the current crypto season.
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Looking ahead to 2023, Arcane predicted in a December 30 report that Binance will reintroduce trading fees in 2023 which will lead to a “normalization of market dominance.”
As noted in a January 3 report from the digital asset data company CryptoCompare, removing fees allows the exchange to attract customers but “must be careful to remain profitable” and “cannot use this strategy for a long time without damaging the bottom line.”
Binance may be subject to regulatory scrutiny in 2023 – especially related to its native token BNB (BNB) – as the fall of the FTX empire comes under increased focus on crypto regulation globally.
An analysis by Bitcoin advocate Nic Carter suggests that while Binance CEO Changpeng Zhao has been vocal about his support for exchanges that provide proof of reserve (PoR), the PoR provided by Binance is incomplete because it “only includes Bitcoin, which only represents 16.5. % of client assets.