• 26 May, 2024

Binance Dominates Spot Trading with 5x More Volume than Coinbase

Binance and Coinbase, both influential players in the cryptocurrency realm, are fiercely competing to establish supremacy. Each platform leverages its unique attributes and tactics to gain a greater portion of the cryptocurrency market. As highlighted by Joao Wedson, Founder & CEO of DominandoCripto, Binance maintains a firm grip on spot trading, while Coinbase boasts custody of major ETF funds like Grayscale (GBTC) and BlackRock (IBIT). 

A recent analysis revealed that Binance’s spot volume surpasses the volume of Coinbase by a factor of five, underscoring its market supremacy. This disparity becomes even more pronounced when considering specific trading pairs, such as BTC-FDUSD, where Binance’s dominance is unchallenged.

One intriguing dynamic between these giants is the inverse relationship between their volume shares and Bitcoin’s price movements. When Coinbase’s volume share increases relative to Binance’s, Bitcoin often experiences a surge in price. 

Conversely, a reduction in Coinbase’s volume share tends to coincide with a shift in trend and frequent price drops in Bitcoin. Such observations illuminate the intricate interplay between these exchanges and their impact on the broader cryptocurrency market.

The Binance/Coinbase Volume Spot Ratio serves as a barometer of the competition between these exchanges. For instance, in early 2023, Binance’s volume dwarfed Coinbase’s by a 53-fold margin, fueled in part by Binance’s zero-fee promotion on spot trades for the BTC-USDT pair. However, the landscape has shifted with the resurgence of ETF-related news, leading to Coinbase reclaiming a larger market share relative to Binance.

Nevertheless, recent disruptions in Coinbase’s operations have cast a shadow over its reliability. A recent system-wide outage lasting over three hours left many users unable to access their accounts or withdraw funds. Coinbase, through their official X page, claims resolution, while numerous users reported ongoing issues with fund withdrawals, raising concerns about the platform’s stability and customer service.

As per Coinglass data, Coinbase’s outage incident also coincided with a slight downturn in Bitcoin’s price, dropping to $61,765 from $62,660 before recovering marginally. The price action triggered approximately $50 million in liquidations over four hours, primarily impacting long traders.

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