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In this week’s Market Spotlight blog, we reflect on the current state of the market, the largest beneficiaries from Binance’s recent decline in market share, as well as the assets that have been outperforming the wider digital asset market.

This blog was created using CCData’s award-winning research and data. You can learn more about our data solutions here.

State of the Market

May has presented a period of stability for Bitcoin and Ethereum, as both assets traded within a bounded range leading to reduced volatility. The maximum price recorded for the two large digital assets was $29,857.86 and $2,018.91 on the 6th of May, while the minimum was $25,848.3 and $1,740.15 on the 12th of May (Data as of the 23rd of May), respectively, for Bitcoin and Ethereum.

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During this time, open interest for Bitcoin exhibited a similar trend, experiencing a -4.15% decrease to $8.87 Billion and negative returns of 9.95% till the 24th of May. Ethereum, on the other hand, recorded a return of -3.75% and an Open interest decline of 26.5% to $5.09 Billion.

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The stability in price action during this period can be attributed to a combination of positive and negative events in the macroeconomic landscape.

On the positive side, as indicated in the last FOMC meeting, the increasing federal rate suggests that the Federal Reserve has a handle on the situation and is working to stabilise inflation. However, there are concerns among investors regarding the overall state of affairs, particularly with regard to the approaching debt ceiling and the liquidity challenges that the United States needs to grapple with.

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Overall, these contrasting factors have contributed to a stable market environment for Bitcoin and Ethereum in May, with positive and negative influences shaping the price movements and investor sentiment.

Exchange Analysis: Binance’s Market Share Continues to Decline

Binance has emerged as a central player in the centralised exchange industry, particularly after the collapse of FTX. The exchange experienced a remarkable surge in market dominance, reaching a record high of 62.6% on March 11th, 2023. However, recent challenges faced by Binance, such as issues with their Canadian market operations, the halt of AUD bank transfers, and difficulties with banking partners in the US, have impacted the exchange.

As a result, its market share declined to around 45% in May, after witnessing a severe drop to 34.4% on March 24th, following their announcement to discontinue zero-trading fees for the BTC-USDT Pair and after suspending operations because of a bug in their matching engine.

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Bullish, OKX, and Bitmex emerged as notable beneficiaries during this period of decline. These exchanges experienced an upward trend in market share, with Bullish witnessing a 1.55% increase, OKX with a 1.44% increase, and Bitmex with a 1.25% increase.

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Similar to its declining spot market share, Binance’s derivatives have also witnessed a decrease in volumes, dropping from a market share of 72.0% in March to 64.0% in May (as of the 25th).

OKX, on the other hand, has seen an increase in derivatives volumes market share from a 13.9% average in March to a 19.7% average in May.

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Asset Focus

Despite the stagnant market conditions, several assets managed to deliver positive returns, aided by different narratives.

• RNDR continued its impressive surge, with a return of 13.99%, benefiting from the increased adoption of decentralised GPU-based rendering solutions. The project introduced new features that aim to enhance rendering speed and reduce costs compared to traditional methods.
• BitDAO’s BIT experienced a return of 5.19%, following the announcement of its merger with their Ethereum Layer2 Mantle.
• Litecoin (LTC) recorded a return of 4.02%, likely driven by the anticipation of the Litecoin block halving scheduled for early August 2023.
• Bitcoin SV (BSV) emerged as a significant beneficiary of network congestion on the Bitcoin blockchain caused by Ordinals NFT and BRC-20 tokens. BSV has experienced a return of 2.30%, from the beginning of May until the 23rd.
• Synthetix, a Layer-2 scaling solution for Ethereum, saw a boost, with a return of 1.57%, following the announcement of a collaboration with liquidity provider Curve Finance.
• Lido (LDO) also witnessed slight gains, with a return of 0.74%, supported by their latest upgrade narrative and significant movements in the wallets of influential investors.

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