Binance's Paradox: User Growth Amid Shrinking Market Share

Despite facing legal challenges and a significant drop in market share, Binance has successfully grown its user base to 170 million.

Binance, a leading player in the cryptocurrency exchange market, has recently seen an intriguing development: while its user base has expanded significantly, its market share has simultaneously declined. This development reflects the complex dynamics of the cryptocurrency market, highlighting Binance's strategic growth amidst competitive and regulatory challenges. Additionally, this situation mirrors wider trends in the Asian cryptocurrency market, including the rise of competing exchanges and the impact of evolving regulations.

Meanwhile, The USDC stablecoin, typically pegged to the US dollar, recently experienced a notable deviation on the Binance exchange, briefly dropping to $0.74. This event occurred during a broader market sell-off and raises questions about the stability of stablecoins in volatile market conditions.

Binance's Growth Amid Market Share Decline and Other Key Developments in the Asian Crypto Market

In a recent roundup of significant developments in the East Asian cryptocurrency industry, several key events have been highlighted. One of the most notable is the growth of Binance, the world's largest cryptocurrency exchange by trading volume. Despite facing legal challenges, including a $4.3 billion settlement with the U.S. Department of Justice over money laundering charges, Binance reported a 30% increase in its user count, reaching 170 million users.

Binance's 2023 Annual Report, published on Dec 28, 2023, revealed the company's expansion in various areas. The exchange listed 431 tokens, supported 112 fiat currencies, and offered over 970 payment methods. Additionally, Binance increased its compliance budget by 35%, from $158 million in 2022 to $213 million in 2023.

However, despite this user growth, Binance's spot market share reportedly fell from 55% at the start of the year to 30.1% by December, according to CCData. This decline in market share is contrasted with the growth of other exchanges like OKX and Bybit, which saw their market shares increase to 8% and 6%, respectively.

Bitget, another crypto exchange, also emerged as a significant player, achieving a spot market share of 4% by November 2023. This growth is attributed to its $30 million investment in the multi-chain wallet BitKeep, which was rebranded to Bitget Wallet. Additionally, Bitget launched a $100 million Web3 fund to support regional exchanges, data analytics firms, and media outlets within the ecosystem.

On the other hand, HTX, formerly Huobi Global, experienced a decline in its spot market share, dropping to 8% from a high of 22% in 2020. The exchange faced several challenges, including an employee revolt over pay and working conditions, and a series of hacks that affected its ecosystem and related companies.

Fake Crypto Seizure Screenshot Causes Panic in China

A fake screenshot alleging police approval of a large cryptocurrency seizure caused panic within China's Web3 community. The screenshot claimed that law enforcement officials had approved the seizure of 38,000 Ether (ETH) and thousands of Bitcoin from foreign individuals custodied on a Chinese Web3 protocol. However, the City of Fuzhou Public Security Bureau clarified that the screenshot was false and warned against spreading rumors.

This incident reflects the tense atmosphere in China's cryptocurrency space, where police have been cracking down on Web3 executives and confiscating protocol assets without due process.

Victory Securities' Success in Hong Kong's Crypto Market

In Hong Kong, Victory Securities, a brokerage firm, surpassed $10 million in monthly trading revenue after securing a virtual asset licensing regime (VASP) from the Securities and Futures Commission in Q4 2023. The firm's success is part of a broader regulatory effort in Hong Kong to establish a mandatory VASP licensing regime for all exchanges in the region.

Matrixport's Role in Bitcoin Price Correction

On Jan. 3, the price of Bitcoin fell by more than 10% to $40,800 before recovering most of its losses. This price action coincided with the release of a report by Singaporean investment firm Matrixport, which suggested that the U.S. Securities and Exchange Commission would not approve a spot Bitcoin ETF in January. Matrixport's founder, Jihan Wu, clarified that the firm does not receive insider information from U.S. regulators and that its analysts base their reports on publicly available information.

These developments highlight the dynamic and often unpredictable nature of the cryptocurrency market in Asia, with regulatory changes, market shifts, and rumors all playing a role in shaping the landscape.

USDC Stablecoin's Brief Depreciation on Binance Amid Market Turbulence

Circle's USDC, a stablecoin pegged to the US dollar, experienced a momentary depreciation on Binance, falling to as low as $0.74. This incident occurred on three separate occasions, following a marketwide sell-off triggered by the report casting doubt on the approval of a spot bitcoin ETF this month.

Details of the USDC Depreciation

The depreciation of USDC happened between 12:10 and 12:21 UTC on Jan. 3. During this period, USDC's value against its tether (USDT) trading pair on Binance dipped to $0.74, $0.80, and $0.79 in quick succession. Each time, the price immediately rebounded to its $1 peg. Such fluctuations can occur when a trader sells a large amount of USDC for USDT, and the available liquidity is insufficient to maintain the stablecoin's peg to the dollar.

Market Conditions and Liquidity

At the time of the depreciation, the 2% market depth on Binance for the USDC/USDT pair was skewed towards the higher end. There were $26 million in orders stacked up to $1.02 and $6.1 million in orders down to $0.98. This imbalance meant that any sell order exceeding $6.1 million could potentially push the price below $0.98. The trading volumes at the times of the dips were $6.2 million and $4.3 million, respectively.

Broader Market Impact

The overall cryptocurrency market was already under pressure due to the report by Matrixport. This news contributed to the liquidation of over $500 million in derivative positions.

Historical Context

It's important to note that this isn't the first time USDC has experienced slight depegs. Over the past few months, there have been several minor deviations, though none exceeded 4% in either direction. The last significant depeg occurred in March 2023 following the collapse of Silicon Valley Bank. At that time, USDC traded down to $0.86 after it was revealed that Circle had a portion of its funds backing the stablecoin held at the troubled bank.

This incident underscores the fragility and volatility inherent in the cryptocurrency market, even with assets designed to be stable. It also highlights the importance of liquidity and market depth in maintaining the stability of stablecoins like USDC.

Overview of Binance’s BNB

Daily chart for BNB/USDT (Source: TradingView)

BNB was up 0.25% at press time, and was trading hands at $322.40 as a result. The altcoin currently has the support of the 9 Exponential Moving Average (EMA) line on the 4-hour chart, but sellers are exerting pressure on BNB’s price. This was evident by the wick present above the current candle.

Nevertheless, buyers still had the upper hand against bears. At press time, the Relative Strength Index (RSI) was positioned above its Simple Moving Average (SMA) line. In addition to this, the RSI line was breaking away above the SMA line, which could suggest increasing buyer strength.

Should BNB remain above the 9 EMA line for the next 12 hours, it could attempt a challenge at the $335 barrier in the following 48 hours. This bullish thesis may be invalidated if the altcoin dips below the EMA line, which was situated at around $319.8. In this alternative scenario, BNB may retest the $305 support level, which was also confluent with a medium-term positive trend line.