Falling Binance, Rising Coinbase

Binance Coin Price Weakens Amid $4.3 Billion Fine and Other Setbacks
Trust Wallet Token Within Binance Ecosystem Also Shows Lackluster Price
Coinbase Market Share Expected to Rise as Binance Falls

Image source=Reuters·Yonhap News

The world's number one cryptocurrency exchange, Binance, has faced a series of setbacks. It has admitted to money laundering charges and agreed to pay a hefty fine, while also deciding to withdraw from the U.S. market. Zhao Changpeng, the founder who had led Binance, stepped down from his position as CEO. As a result, the prices of cryptocurrencies issued by Binance have shown a downward trend. In contrast, Coinbase has gained a reflective benefit, leading to a reshuffling of global exchange market shares.

According to CoinMarketCap, a global cryptocurrency market data site, as of 2:19 PM on the 30th of last month, the price of Binance Coin was recorded at $229, down 0.33% from the previous day. Compared to a week ago, it fell by 2.80%. Compared to a month ago, it rose by 1.40%, but it dropped nearly 23% compared to a year ago. This is in stark contrast to the representative cryptocurrency Bitcoin, which rose 11.03% compared to a month ago and 125.55% compared to a year ago.

Binance Coin is a cryptocurrency issued by Binance and ranks 4th in market capitalization among all cryptocurrencies. However, due to the setbacks Binance has faced, it has not gained momentum. On the 21st of last month (local time), Binance and Zhao Changpeng admitted to charges including money laundering and agreed with the U.S. Department of Justice to pay a fine of $4.3 billion (approximately 5.5556 trillion KRW). Zhao Changpeng, who founded Binance in 2017 and grew it into the largest exchange, stepped down from his CEO position, and Binance also decided to withdraw from the U.S. market.

Additionally, the trading volume of BUSD, a stablecoin created in partnership between Binance and Paxos, is also declining. From the beginning of November until the 21st, the average daily trading volume was about $500 million, but it sharply dropped to around $382 million afterward. BUSD is designed to be pegged to $1 and is mainly used for cryptocurrency trading.

Not only Binance-issued cryptocurrencies but also other coins within the Binance ecosystem are being affected. Binance acquired the personal cryptocurrency wallet platform Trust Wallet in 2018, but the price of the Trust Wallet Token remains sluggish. As of the 30th of last month, it was trading around $1.10, down 5.55% compared to a week earlier. The Trust Wallet Token grants holders the right to participate in policy decisions, such as determining new blockchains and cryptocurrencies supported by Trust Wallet.

While Binance and its issued coins, as well as its ecosystem, are being impacted, Coinbase, a competing exchange with the largest number of U.S. users, is gaining reflective benefits. According to cryptocurrency data firm CryptoQuant, on the 23rd of last month, Binance's Bitcoin holdings decreased by 5,000, while Coinbase's Bitcoin holdings increased by 12,000. Coinbase's stock price recorded $127.82 on the 29th of last month (local time), down 0.35% from the previous session but the highest since April last year. Compared to $92.92 on the 10th of last month, the stock price surged 37.56%.

There are also forecasts that Coinbase will absorb Binance's market share and become the number one global cryptocurrency exchange by trading volume. Furthermore, if the launch of a Bitcoin spot Exchange-Traded Fund (ETF) becomes a reality, Coinbase's growth is expected to accelerate even more. Coinbase currently holds custody for 13 out of 19 cryptocurrency spot ETFs pending with the U.S. Securities and Exchange Commission (SEC). An industry insider said, "While some view this as a positive development because Binance has shed its risks, it is true that the gap in market share between Binance and Coinbase is narrowing," adding, "With a new competitor challenging Binance's dominance, the crypto market is expected to become more active and transparent."