Curse or blessing? Binance controlled 92% of Bitcoin trading volume at the end of 2022

• Binance controlled 92% of BTC spot trading volume in 2022 according to Arcane Research. 
• The exchange also scored other wins in the crypto space having emerged as an outlier in the 2022 crypto winter. 

Binance, the world’s largest cryptocurrency exchange by trading volume, has emerged as the preeminent venue of Bitcoin (BTC) trading in 2022.

Arcane Research, a crypto-focused data-driven analysis and bespoke research firm, revealed this in a new report. Per the report, Binance captured 92 percent of all Bitcoin spot trading volume in 2022 as of Dec. 28. This is a more than a 2x increase from the 45 percent BTC spot market volume the exchange controlled at the start of 2022.

The exchange also controlled 61% of the BTC derivatives market by volume in 2022. The figure is about a one-third increase from Binance’s market share at the start of 2022. Meanwhile, it enjoyed 49% dominance of the crypto perpetual open interest (OI) market.

“There are no other evident ‘winners’ of 2022 other than Binance when it comes to the crypto market structure and market dominance. No matter how you look at it in terms of trading activity, Binance is the crypto market,” the report said.

Arcane adds that it is non-negotiable that Binance’s 2022 performance consolidates its dominance over BTC spot markets. The report also points out that Binance’s dominance predates the collapse of FTX. The spot market dominance began to rise in July when Binance eliminated all trading fees for its BTC spot pairs.

Meanwhile, Binance also scored other remarkable wins in 2022. Arcane highlights that Binance saw its dominance of the stablecoin market increase, and saw its native BNB token outperform BTC and ETH.

The exchange was also a “clear outlier in terms of employment” in 2022, the research notes. Binance doubled its employee stack in a year that saw many crypto firms laying off employees or going bankrupt.

Could Binance’s dominance be a threat to the crypto market?

Significantly, Binance’s performance was anticipated before the year ran out. CryptoCompare’s November exchange review report noted that Binance had clinched its highest-ever market share dominance at 52.9 percent shortly after the FTX collapse.

However, the performance has raised concerns among crypto market participants. These concerns center around Binance becoming a monopoly. This outcome could threaten the crypto market’s stability.

“Retail crypto could enter a dark age that takes forever to exit should Binance fail. Binance is too big… It is not healthy to have so much of the trading volume concentrated with any one exchange,” Edward Moya, senior analyst at Oanda, said.

His concern comes on the back of Binance recently being embroiled in controversy over its solvency. Binance released a proof-of-reserve (PoR) audit report for its BTC holdings backing user assets. Critics have however pointed out that the report only shows assets without showing the exchange’s liabilities.

Adding to the unrest is the announcement by Mazars that it was ending all work for crypto clients. The accounting firm carried out Binance’s PoR audit, along with those of Crypto.com and KuCoin.