Recent reports suggest that Binance China’s dominance of the crypto market has continued despite ongoing government bans. According to reports, the crypto trading platform now holds the highest daily trading volume of up to $90 billion. Astounding numbers, considering the Chinese government has banned all trading, mining, and initial coin offerings (ICO) since 2017. Despite this, Binance China’s foothold on the global crypto market has shown no sign of diminishing. This article delves into the surprising information surrounding Binance China’s continuing growth.
- 1. Chinese Crypto Exchange Dominates Global Market
- 2. Binance Volume Hits New High
- 3. China’s Crypto Ban Fails To Stem Trading Activity
- 4. Market Optimism Undimmed Despite Government Pushback
1. Chinese Crypto Exchange Dominates Global Market
China continues to dominate the world’s cryptocurrency exchanges, accounting for more than half of all global trading volume. The country is home to four of the world’s 10 largest crypto exchanges, according to a report by research firm Diar.
Huobi, OKEx, and Binance are all China-based exchanges, and all three are in the top five exchanges with the largest trading volumes in the world. The fourth China-based exchange, BitMEX, ranks eighth.
Chinese crypto exchanges account for a large portion of market share for major cryptocurrencies such as Bitcoin and Ethereum. For Bitcoin, Huobi leads the way with a 29.3% market share, while OKEx comes in second with 17.9%. Binance holds the third spot with 12.8%, and BitMEX rounds out the list with 8.7%. For Ethereum, Huobi and OKEx also dominate with 42.9% and 20.1% of the global market share, respectively.
2. Binance Volume Hits New High
The volume of Binance saw an unparalleled growth in 2020 with its monthly trading volume reaching an all-time high of $68 billion in October. This record has established them as one of the top outlets for digital asset trade, a spot immensely desired by other exchanges.
The growth in volume was driven by a number of events, including the introduction of margin trading and futures contracts. The margin trading service enabled users to stake their own funds for loans up to three times the amount of their stake, to trade in higher quantities without having to tie up money in an illiquid position. Similarly, Binance futures provided a portal to trade derivatives at a higher leverage rate with Hedged Positions, reducing the slippage in the overall trading profits.
Apart from these, the world wide demand for cryptocurrencies due to international financial slowdown and US election season has also seen a surge in the totals of Binance. Additionally, it got a further bump due to the Bitcoin halving event in May, which saw a slight spike in its price. This led to more traders to move towards Bitcoin and other cryptos.
- Monthly Trading Volume: $75 Billion (Oct 2020)
- Growth Drivers:
- Introduction of Margin Trading
- Introduction of Futures Contracts
- Worldwide Demand
- Bitcoin Halving
3. China’s Crypto Ban Fails To Stem Trading Activity
Since the Chinese government implemented a complete ban on cryptocurrencies in 2017, trading activity has not been stopped. Surprisingly, research has shown that China is still the world’s biggest crypto trader.
Increased Trade Volumes Although the volume of crypto transactions in the country has decreased significantly, data analysis has revealed that there has been a steady increase in trade volumes since the ban was enacted. According to one study, the daily volumes of crypto transactions in China are now over $16bn.
Changing Trading Practices Chinese traders have changed their trading habits to comply with the ban. Capital flows between China and crypto exchanges quickly shifted from direct fiat-to-crypto purchases to peer-to-peer (P2P) transactions. Moreover, cryptocurrency exchanges such as Okex are also using a decentralized network of nodes in China to continue serving the Chinese market.
To further deceive authorities, some traders have gone as far as using virtual private networks (VPNs) and false digital identities. In spite of the Chinese government’s efforts to contain crypto trading, the market remains active and traders are finding more creative ways to bypass the ban.
4. Market Optimism Undimmed Despite Government Pushback
Despite a lack of support from the government, optimism remains in the market. Despite government pushback, market sentiment remains positive. Here’s why:
- The economy continues to show steady improvement. The latest figures show that GDP growth has been steady at 5%. Furthermore, employment figures have improved over the past year, with more jobs being created across all sectors.
- Many economic indicators have remained positive. The Consumer Confidence Index is up, reaching its highest level in over a year. This indicates that consumers are feeling more confident about their prospects, which is a positive sign for the economy.
- The stock market is hitting record highs. The S&P 500 is up over 20% from its lows earlier this year. This is a sign that investors are feeling optimistic about the economy and are investing in stocks in anticipation of future growth.
Despite government pushback, market optimism remains high. Economic indicators have trended positively and the stock market is hitting record highs. Investors and consumers are feeling positive and confident about the future.
Despite the Chinese government’s attempts to limit citizens’ access to cryptocurrencies, Binance’s success in China remains undeterred. It is the leading exchange, with unprecedented trading volumes despite the nation’s ongoing policy of crypto suppression. Whether this reign of success will continue or falter at any point still remains to be seen.
