Binance, the world’s leading cryptocurrency exchange by market cap, grabbed 66% of trading volumes on centralized exchanges in the last quarter of 2022. This is according to a recent report by CryptoCompare.
Binance Increased Its Market Share In 2022
The report revealed that Binance recorded an increase in market share in 2022. In the first quarter of 2022, Binance accounted for 48.7% of the total cryptocurrency trading volumes on centralized exchanges.
However, by the fourth quarter, Binance saw its position grow to 66.7%. The growth can be attributed in part to the collapse of the FTX crypto exchange during the last quarter of the year.
Despite the growth in market share, spot trading volumes declined by 45.3% to $5.29 trillion in 2022. This can be attributed to the ongoing bear market, which saw prices of most coins lose more than 60% of their values last year.
The report looked at the top 11 cryptocurrency exchanges, including Binance, FTX, Coinbase, Kraken, Bitfinex, Bittrex, Bybit, Crypto.com, Huobi, Kucoin, and OKX. CryptoCompare revealed that Binance and Bybit were the only exchanges to see an increase in market share in each quarter of 2022.
When commenting on Binance’s lead, CryptoCompare wrote;
"The increase can be attributed to consolidation in the industry as overall volumes trend downwards, with exchanges competing for reduced volumes."
Centralized exchanges continue to dominate over DEXes
Trading volume on centralized crypto exchanges dipped by 46.2% in 2022 thanks to the ongoing bear market. However, volumes on centralized exchanges continue to be higher than that of decentralized exchanges (DEXes). The report reads;
"2022 proved to be a transformative year for the digital asset industry. Following the exponential growth that was seen in the bull market of 2020 – 2021, the year's idiosyncratic events highlighted the deficiencies of the industry and showcased the value proposition that digital assets provide market participants compared to traditional finance."
FTX, one of the leading crypto exchanges in the world, filed for Chapter 11 bankruptcy in November after a severe liquidity crisis. In its report, CryptoCompare said the need for security and transparency would play a crucial role in the centralized exchange sector in 2023. The report concludes that;
"Following the fall of FTX, the main takeaway from 2022 is the increased importance that security and transparency will play in the CEX sector in 2023. We hypothesize that exchanges with superior transparency policies, for example, releasing clear and audited Proof of Reserves (PoR), will be those that succeed, particularly in a year which we believe will have sustained lower volumes."