Binance earns a maximum 10 basis points, or one-tenth of 1% on spot trades, and between 2 and 4 bps on futures. Let’s see what the current annual run rate of $16.8 billion, as shown in the CCData figures, might mean for Binance’s revenues. We simply don’t know how much including the business from its largest customers would have increased the implied total. This doesn’t mean the Journal’s numbers are incorrect. In May, CCData posits that Binance did $1.3 trillion in trades, three times the number derived from the Journal’s reporting that China accounted for 20% of Binance’s volume that month. What Binance’s falling volumes could mean for revenues-and BNB Keep in mind that Binance is now capturing a smaller piece of a pie that’s much reduced from either 2022 or even the first quarter of this year. After hitting 55% in spot and 65% for futures in February, its shares dropped respectively to 40% and 56% in July. Its annualized volumes slowed to $16.8 billion a year, down around 28% from both the first three months of this year, and measured against 2022.
The turning point came in March, when Binance ended a promotion, started in July of last year, allowing spot customers to buy and sell Bitcoin, using the most prominent coins, at a zero fee.įrom the start of April through the end of July, Binance suffered a dramatic downshift in horsepower. From January through March, Binance’s trading defied the downturn by running at the same yearly dollar rate as in 2022.
But Binance got a big boost via the collapse of its premier global competitor, FTX. In 2023, the scale of all global transactions kept falling. Though Binance slightly grew its share, the overall retreat lowered its take by 26% to $23.3 trillion. Volumes fell by over one-third to $48.7 trillion. The frenzy cooled considerably last year. Binance captured an incredible $31.7 trillion, or 43% of those trades. In 2021, digital currency transactions boomed, reaching $74 trillion for the year, according to CCData numbers. So the all-in China number is bigger than $90 billion. The piece notes that the $90 billion figure for China “ trades made by a subset of very large traders.” It doesn’t take a stab at estimating how much crypto those whales are buying and selling on Binance. The Journal, however, adds an important proviso. This is an astoundingly low number that would signal a recent collapse in Binance’s revenues, and a strong probability it’s already booking losses. Hence, on an annualized basis, Binance’s sales would be running at around $5.4 trillion (12 months x $450 billion). The story specifies that the $90 billion comprises both spot and futures transactions, the latter the most important contributor by far. The Journal’s finding that China’s $90 billion in trading for May accounted for one-fifth of Binance’s overall business implies that its volumes for the month totaled $450 billion. And its capital rests primarily in a self-issued, relatively little-traded coin that-if Binance sells it to meet operating expenses-is vulnerable to a deep dive that could rock the crypto world. If Binance can’t collect enough revenue to cover its rent, personnel, data center, compliance, and marketing costs, it will need to start exhausting its war chest to meet the shortfall. The mystery centers on whether the damage is so severe that Binance, which CZ declares is “still profitable,” will soon start losing money. Still, it’s clear that double hit from legal crackdowns targeting Binance and steep drop in overall trading of digital currencies has hammered the exchange’s volumes.
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