Binance.US announced it is cutting several Bitcoin trading fees, which brought the stock of several of its rivals down — including Coinbase. The move, amid a crypto winter which led to massive layoffs at several cryptocurrency firms, might also indicate the start of a price war and a potential consolidation of the industry.
On June 21, Binance.US announced it was bringing zero-fee trading to all new and existing customers to trade Bitcoin against the dollar, Tether, USD coin and BinanceUSD.
“As recession fears mount and inflation costs increase, we believe in offering greater cost savings on Bitcoin and value to everyone in the crypto ecosystem,” Binance.US said in a press release. “While we already offer trading fees up to 10X lower than other major crypto platforms, in these challenging times we seek opportunities where we can take an extra step and provide what we call ‘truly extraordinary value,’ delivering substantial savings for customers who trade BTC.”
Shares of Coinbase were down 9.7% on June 22 following the news, but have since bounced back and are up about 6% Friday.
Steve Bassi, co-founder and CEO of Polyswarm, a decentralized, crowdsourced threat-intelligence-security provider, told GOBankingRates that we’re seeing a great competition for market share playing out right now, notably as so many players are going bankrupt or are on the verge of it.
“Celsius and Voyager are struggling, along with Blockfi at a time when Binance and FTX appear to be cash-strong and acquiring, in big ways, various crypto platforms around the world,” Bassi said. He added that Binance founder CZ and FTX’s CEO Sam Bankman-Fried might be turning into kingmakers here.
“So when we see a major exchange like Binance cutting trading fees on Bitcoin to zero, this is a major signal to competitors. Binance is flexing its muscles, looking to acquire market share as others bleed. It will be an interesting next few years in this market, and the companies that emerge from this downtrend will do so stronger and bigger,” he added.
Indeed, the effects of the “crypto winter” are rippling across the entire industry. Earlier this month, Coinbase was the latest crypto giant to announce layoffs. The company announced it was laying off 18% of its staff “to ensure [they] stay healthy during this economic downturn.”
Other platforms announced layoffs too, including Robinhood — which said it would cut 9% of its workforce in April following a period of “hyper growth” — and Gemini, run by twins Cameron and Tyler Winklevoss, which slashed the company’s workforce by 10%.
Zachary Friedman, co-founder and CSO of digital asset brokerage Secure Digital Markets, told GOBankingRates that Binance’s strong positioning and reduced fees will allow them to capture customers and expand market share. In addition, he believes that the recent layoffs at rivals represent an opportunity to grow for Binance.
“With the chill of crypto winter settling in, the gap between strong and weak companies is going to grow. We expect to see enhanced consolidation and a different landscape emerge during the current market cycle,” Friedman said. “It will be interesting if Binance goes beyond just lowering its fees for Bitcoin to include other crypto assets — this will place even more pressure on competitors.”