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Over the last week, the broader cryptocurrency market witnessed a mega rally jumping 12% and adding more than $180 billion to the overall market cap. While Bitcoin and altcoins together participated in this rally, Binance’s BNB token missed the bus entirely.
This happens amid the challenging outlook that Binance is facing amid its ongoing $4.3 billion settlement with US regulators. Over the last week, while almost all of the top ten cryptocurrencies clocked double-digit gains, Binance’s BNB token barely managed 1% returns.
Binance Losing Market Share
Binance Coin (BNB) is experiencing a challenging year, reflecting the exchange’s regulatory struggles. BNB, known for providing perks like reduced trading fees on the Binance platform, is notably the sole major token showing a year-to-date loss, as reported by Bloomberg.
The regulatory woes for Binance reached a significant point in the US, after entering guilty pleas on November 21 in connection with anti-money-laundering and sanctions violations. This development underscores the growing regulatory scrutiny faced by the cryptocurrency exchange.
Despite being a dominant force in the digital asset trading landscape, Binance is witnessing a decline in its market share. The platform’s share of spot trading volumes decreased from 55% at the beginning of 2023 to 32% in November, based on data from CCData. Similarly, its share in the derivatives market dropped from over 60% to 48%.
Matthew Sigel, the head of digital-assets research at VanEck, predicts a shift in the landscape, anticipating that Binance might lose its top position in centralized exchanges. He cites competitors like OKX, Bybit, Coinbase, and Bitget as potential contenders to take over the leading spot amid Binance’s recent plea deal with US authorities
Binance’s founder Changpeng Zhao stepped down as the CEO after pleading guilty. Richard Teng, who has succeeded Zhao as the head of Binance, is tasked with the challenging mission of restructuring the company to navigate regulatory challenges while also preventing further erosion of market share. In an interview last month, Teng aimed to convey confidence by stating that Binance’s revenues and profits continue to exhibit strength.
BNB Token Under Huge Pressure, Will XRP Take the 4th Spot?
In November, Binance witnessed the second-highest monthly outflow of funds, with customers withdrawing a net $1.6 billion, as reported by DefiLlama data. However, there has been a partial reversal, with a net inflow of $398 million onto the exchange in December thus far.
Following the guilty pleas and a hefty fine exceeding $4 billion in the U.S., BNB has experienced an 8% decline, marking one of the largest penalties in U.S. history. This performance contrasts with the 14% gain in an index tracking the top 100 digital assets during the same period.
Clara Medalie, Director of Research at Kaiko, notes that BNB’s current underperformance is attributed to it being perceived as a proxy for Binance.
Amid its recent underperformance, the BNB token holds the risk of losing the fourth spot to Ripple’s XRP. The XRP price is up by 67% year-to-date amid positive developments in the Ripple vs SEC case.
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