Binance, the world’s largest cryptocurrency exchange, has experienced a significant decrease in Bitcoin trading volume this month, with a 26% drop since the start of September, according to research firm CCData.
The decline is partially due to the termination of a zero-fee promotion on Thursday, which had allowed customers to trade Bitcoin and the TrueUSD stablecoin without any charges. Following the conclusion of the incentive on September 7, the trading volume for this pair fell by 89%.
This pattern is not new for Binance. The exchange has previously seen a drop in trading volumes and market shares following the end of promotional campaigns. In March, for example, Binance’s share of all spot trading fell from 65% to 58.8% within a week after a similar zero-fee initiative for Bitcoin cryptocurrency pairs ended.
However, the cessation of zero-fee trading promotions is not the sole reason for the dwindling trading volumes. Regulatory concerns surrounding Binance have likely prompted users to switch to alternative platforms. Earlier this year, both the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission lodged lawsuits against Binance, alleging that the platform failed to register with U.S. regulators. Binance and its founder Changpeng Zhao are currently contesting these charges in court.
Moreover, Binance has been facing substantial outflows since August began. Approximately 12,230 Bitcoin, valued at around $330 million, and about 198,200 Ether, worth approximately $323 million, have left the exchange. These two cryptocurrencies represent a significant portion of the estimated $1 trillion crypto market, with Bitcoin accounting for around half and Ether making up roughly 20%.
The market share of Binance has also been declining. From commanding 56.9% of the spot market share in March, it has fallen to 33.9%. Binance.US, the exchange’s American arm, has also been suffering from a shrinking market share. Despite these setbacks, Binance remains the operator of the largest crypto derivatives platform worldwide.
As of Thursday, a spokesperson for Binance was not immediately available to comment on these developments.
