2024 has completed its first month, and the centralized exchange (CEX) in the most profitable track of the cryptocurrency market has also submitted the most comprehensive annual data.

According to TokenInsight's "Crypto Exchange 2023 Annual Report," DeFiLlama, and CoinGecko data, in 2023, the top 10 cryptocurrency exchanges globally contributed a total trading volume of $34.26 trillion, a decrease of about 16% from 2022. Binance ranked first in annual trading volume for spot and derivative products, with OKX and Bybit ranking second and third, respectively.

In terms of market share, Binance decreased from 54.2% at the beginning of the year to 48.7%. Despite the over 5% decrease, it still maintains a dominant position. OKX holds 16.1%, and Bybit holds 12.3%, both of which have increased since the beginning of the year, but combined they are still less than Binance. According to KaikoData, Binance's market share has already recovered to 49% in the past two months.

Looking at the changes in trading volume and net fund inflows, Binance's decrease in market share is related to its enforcement actions with regulatory authorities such as the U.S. SEC and Department of Justice. Particularly, after reaching a settlement with the U.S. Department of Justice and being fined $4.3 billion on November 21 last year, there was a net outflow for 13 consecutive days, totaling $2.865 billion leaving Binance.

There are also concerns from the outside world about whether Binance's financial strength remains robust.

On December 4th, funds flowed back into Binance. In the past two months, during the high expectations for Bitcoin ETF in December and January, the net inflow of USD into Binance reached $5.4 billion, reclaiming the lost ground. The total asset value of Binance addresses on various chains reached $80.9 billion at the end of January, a 28.25% increase from the same period last year, making it the leader in terms of both volume and growth.

The data to some extent stabilized the internal and external confidence in Binance. Its market foundation accumulated over the past six years has not been easily shaken, and it has benefited from the recent overall uptrend in the cryptocurrency market. The "global first" has not slackened, and its desire for victory remains high in terms of user attraction and retention.

CEX Industry: Binance Still Tops in Multiple Indicators

It has been two months since Binance reached a settlement with the U.S. Department of Justice, and apart from the impressive $4.3 billion fine, the U.S. Department of Justice described the platform as "the world's largest," without even adding "one of." This does not rule out the regulatory element of "the higher the positioning, the heavier the responsibility," but the impression of "the world's largest" is not an exaggeration.

In the just-concluded 2023, Binance still occupies the largest market share among cryptocurrency trading platforms, although this figure has dropped from 54.2% at the beginning of the year to 48.7%. According to TokenInsight's "Crypto Exchange 2023 Annual Report," this figure is still close to half, with the remaining 51.2% shared among 9 mainstream cryptocurrency trading platforms, of which only 3 have a market share of over 10%.

Crypto CEX Market Share Analysis (from TokenInsight)

Since Mt.Gox opened the commercial track of cryptocurrency exchanges in 2010, the rise and fall have become the eternal theme here, always the protagonists. The most noticeable change for Chinese users is the previous "big three," and now, "B" and "O" are still present, while "H" is being replaced by the new "B."

The top 3 is a sequence, and the current top three have a significant difference in data between the second, third, and first.

In terms of trading volume, based on CoinGecko data (from the first 11 months of 2023 and January 2024), in the spot market, Binance's trading volume is $3.77 trillion, OKX's is $0.54 trillion, and Bybit's is $0.43 trillion, which combined is less than one-third of Binance's volume. For CEX derivative trading, Binance contributed a more substantial trading volume of $14.32 trillion, while OKX and Bybit contributed $4.96 trillion and $3.69 trillion, respectively.

Top 3 Exchange Trading Volume Data in the Past 12 Months

In terms of the total value of assets (TVL) in the addresses of exchanges on various chains, according to DeFiLlama data, as of January 31, Binance's total asset value was $809 billion, with OKX in second place at $155 billion, and Bitfinex in third place at $137 billion, with a significant gap.

Both Binance and OKX had a fund inflow of over $1 billion in the month. The exchanges that followed, including Robinhood and Bybit, had a total of 6 exchanges with a monthly inflow value of over $1 billion.

Turning Negative to Positive: Binance's Inflow Exceeds $5 Billion in Two Months

Looking at the data, Binance's TVL remained relatively stable throughout 2023, consistently around $600 billion, with high liquidity in fund inflows and outflows.

In June and September of last year, Binance's TVL experienced two noticeable declines, dropping to $58.8 billion and $58.1 billion, with outflows of $3.8 billion and $1 billion in those two months, respectively.

These two declines were somewhat related to regulatory/partner actions. In June, it was when the U.S. SEC sued Binance for selling unregistered securities, and in September, Binance's Euro banking partner Paysafe terminated their cooperation.

Binance TVL and USD Inflow Data in the Last 12 Months (from DeFilLama)

It is evident that external situations have a significant impact on Binance users' decisions on fund movements, often resulting in inflows after outflows. The event that brought Binance's name to the media headlines was the settlement with the U.S. Department of Justice on November 21 last year. After that, funds flowed out of Binance for 13 consecutive days in November, with a total outflow of $1.635 billion.

Interestingly, Binance's TVL increased during this period, from $64.6 billion in October to $67 billion in November. This resilience of Binance is enviable.

In December and January, Binance's TVL broke previous records, reaching $79.6 billion and $80.9 billion, respectively, representing an 18.80% and 20.74% increase from November. The TVL in January also grew by 28.25% compared to the same period last year. Following the pattern of outflows followed by inflows, the USD value turned positive in the two months, with inflows of $3.113 billion and $2.359 billion, respectively. During these two months, Binance's market share also increased to 49%.

In the past two months, Binance's market share has recovered to 49.44% (from KaikoData).

In 2024, the impact of the U.S. Department of Justice's punishment on Binance is weakening, which is reflected not only in the retention of funds on Binance but also in trading volume.

In the past two months, Binance has maintained its leading position in both spot and derivative markets. According to CoinGecko data on February 1st, Binance's 24-hour spot trading volume was $148.72 billion, exceeding the average daily trading volume of $103.32 billion in the past 12 months. The 24-hour derivative trading volume was $397.19 billion, while the average daily derivative trading volume in the past 12 months was $392.46 billion.

External Market Support, Internal "Will to Survive" at Full Capacity

Faced with the adverse impact of the "largest fine in the history of U.S. financial regulation," Binance has indeed demonstrated the resilience of its foundation in the cryptocurrency trading market over the past 6 years. This "challenge" seems unlucky, but also very fortunate.

In the two months following the settlement between the U.S. Department of Justice and Binance, coinciding with the increasing expectations for the launch of Bitcoin ETF, Binance's total trading volume continued to break through, reaching $1.95 trillion and $1.93 trillion, respectively.

Some analysts even believe that the resolution of the entanglement between the world's largest cryptocurrency exchange and regulatory authorities with criminal jurisdiction has actually helped accelerate the approval of the Bitcoin ETF. The cause-and-effect logic is subjective, but at least in terms of the chronological sequence, this is how things have developed.

On November 21 last year, the U.S. Department of Justice reached a settlement with Binance; on January 10 this year, the Bitcoin ETF was approved. In December and January, Bitcoin reached new recent highs of $44,000 and $48,000, and the retention of funds and trading volume on Binance also saw significant rebounds during these two months.

Total spot + derivative trading volume on Binance in the past 12 months

In the past 12 months, the highest monthly trading volume on Binance occurred in March last year, with spot trading volume of $559.47 billion and derivative trading volume of $1,750.73 billion, reaching a total monthly trading volume of $23.102 trillion. If we compare the total trading volume in February last year and January this year, it has already reached a new high in the past 12 months.

Although the fund outflow from Binance in November provided an opportunity for other competitors to gain market share, the market situation has also helped Binance maintain its foundation. At the same time, the platform is also striving to "defend its territory."

In the face of leading competition, this solid "global first" is still at full capacity in terms of "will to survive," or maintaining high sensitivity to attracting and retaining users. The actions of Binance Launchpool's new coin mining section have been widely recognized as having the "most significant wealth and traffic effects." In January 2024 alone, Binance Launchpool's new coin mining section launched 4 projects, compared to 10 projects for the entire year of 2023 and 5 projects for the entire year of 2022. Binance has been able to retain $5-6 billion in funds on the platform in a short period, with the number of participants in each period reaching around 200,000.

Following Binance, similar sections on other platforms have also begun to accelerate their launches. For cryptocurrency holders, competition between trading platforms is always a pleasure to see. Binance's ability to maintain its lead in adversity also raises expectations for what other attractive "moves" it can make in the future to attract users and funds.

In 2024, the impact of regulatory authorities on cryptocurrency exchanges will not stop, and the competition in the CEX track will continue. Over the years, the CEX landscape has always been changing, with rise, decline, and disappearance happening every year. It is not difficult to see that in the face of users and the market, platforms that always maintain the will to survive and a sense of awe can become long-distance runners on the track. As long as the cryptocurrency market continues to expand, the finish line will be endless.

(Disclaimer: Readers are strictly required to comply with local laws and regulations. This article does not represent any investment advice.)

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