Binance grabbed 66% of crypto trading volumes on centralized exchanges in the 4th quarter of 2022 as the industry consolidated following the fall of FTX

• Binance captured 66.7% of all trading volume on centralized crypto exchanges in the last quarter of 2022.
• Trading volumes on centralized exchanges declined 46.2% last year amid a harsh macro environment and crypto bear market.

Binance took a dominant percentage of market share among the top centralized exchanges in the last three months of the year, increasing from 48.7% in the first quarter of the year to 66.7% in the last quarter, according to a CryptoCompare report published on Wednesday.

Even as spot trading volumes on Binance fell 45.3% to $5.29 trillion, the rise in the exchange's market dominance continued throughout 2022.

The report accounted for 11 exchanges, which include Binance, FTX, Coinbase, Kraken, Bitfinex, Bittrex, Bybit, Crypto.com, Huobi, Kucoin, and OKX. Binance and Bybit were the only exchanges to see an increase in market share in each quarter of 2022.

"The increase can be attributed to consolidation in the industry as overall volumes trend downwards, with exchanges competing for reduced volumes," the report said of Binance's lead.

Amid a lengthy crypto bear market, trading volumes on centralized exchanges declined 46.2% in 2022. Volumes across centralized exchanges, or CEXs, stayed well above decentralized exchanges, or DEXs, according to the report.

"2022 proved to be a transformative year for the digital asset industry," the report reads. "Following the exponential growth that was seen in the bull market of 2020 – 2021, the year's idiosyncratic events highlighted the deficiencies of the industry and showcased the value proposition that digital assets provide market participants compared to traditional finance."

The industry took hits amid decades-high inflation, leaving investors wary of speculative bets like crypto as the Federal Reserve raised interest rates. Digital assets were also reeling from the collapse of industry giants like algorithmic stablecoin TerraUSD, hedge fund Three Arrows Capital, centralized lender Celsius, and Sam Bankman-Fried's FTX.

FTX, the crypto empire once worth $32 billion, filed for Chapter 11 bankruptcy in November after a severe liquidity crisis.

"Following the fall of FTX, the main takeaway from 2022 is the increased importance that security and transparency will play in the CEX sector in 2023," according to the report. "We hypothesise that exchanges with superior transparency policies, for example, releasing clear and audited Proof of Reserves (PoR), will be those that succeed, particularly in a year which we believe will have sustained lower volumes."