Binance, a prominent player in the cryptocurrency trading realm, has seen a notable reduction in its market share throughout the year. In the past, it held a commanding position, responsible for over 50% of the total crypto trading volumes across all centralized exchanges, as reported by OxScope.

However, the tide has shifted, as Binance's spot trading share has dwindled, falling to 40% by October 2023 from its previous stature of 62% a year ago. The derivatives market share of Binance, on the other hand, has managed to hover around the 50% mark for the majority of the year.

Despite growing scepticism towards centralized crypto exchanges (CEXes), they remain the preferred choice for investors when it comes to buying and selling digital assets. Their appeal lies in their user-friendly interfaces, substantial asset pools, and swift transaction times, which have secured them the lion's share of the market. The performance of CEXes has, therefore, become a vital indicator of the broader crypto market's health.

Binance's Dominance Declines

Binance, being the largest and most popular trading platform, remained in the lead despite noticeable declines in its dominance. A year ago, it boasted a market share of 54.6%, but by July 2023, it had plummeted to 45%. The challenges faced by Binance in 2023 include unrelenting regulatory pressure in the U.S. and a prolonged period of low market volatility.

Source: OxScope

Upbit's Rise in Spot Trading

Meanwhile, Binance's market share in spot trading witnessed a marked decline, dropping from 62% to 40% by October 2023. In contrast, Coinbase, the largest U.S.-based exchange, maintained a steady market share, ranging between 5% and 7% throughout the year. The South Korean-based Upbit emerged as a significant success story, with its market share climbing from 5% a year ago to 15% in the latter part of October, surpassing Coinbase to become the second-largest exchange by monthly volumes.

Source: OxScope

OKX Strengthens in the Derivatives Sector

In the derivatives sector, Binance fared relatively better, with its market share hovering around the 50% level for most of 2023. OKX, on the other hand, witnessed significant growth, with its share of derivatives trading increasing from 10% last year to 15% by 17 October. At the time of reporting, OKX had processed $12 billion in derivatives trading in the last 24 hours, making it the second-largest player in this segment after Binance. Other second-tier players like Bybit and Bitget maintained steady volumes, with derivatives trading dominating the overall crypto trading landscape.

Source: OxScope

Binance's Asset Value Dips

Another metric to assess a CEX's efficiency is its asset value. Binance has maintained an upper hand in this regard, but its market share gradually shrunk from 50% to 45% over the past year. The lost market share appears to have been captured by Coinbase and OKX, as both exchanges recorded steady increases in their reserves during the same period. Notably, Binance and Coinbase accounted for more than 60% of the deposit addresses in the CEX market. However, it's essential to consider differences in deposit and withdrawal rules when interpreting this data.

Source: OxScope

Source: OxScope

Moreover, the data revealed some intriguing contradictions. While Coinbase boasted a large number of deposit addresses, its active address count was disproportionately low, suggesting that many of the addresses were no longer in use. In contrast, the active address count of Binance and OKX closely matched their deposit addresses, indicating ongoing user engagement.