CMC Acquisition: Binance is stepping further to seat its leadership in the crypto space
Introduction
One week ago, Binance has announced the acquisition of CoinMarketCap for an undisclosed amount (Rumors valued the deal at $400M).
Following the announcement, Carylyne Chan (previously CSO and n°3 at CMC) has been appointed by Binance as interim CEO to lead the platform. Because of growing concerns from the crypto community, she immediately stated that CMC will be keeping its historical neutrality towards the market.
But what can we really expect such neutrality and why is it a strategic move for Binance? TradingBull proposes an analysis:
The ambition of Binance:
Changpeng Zhao (CZ), Binance Funder and CEO, has proven being a talented business strategist. Over the past year, Binance has grown incredibly fast and extended its reach over less developed but promising markets such as Latin America or India (with strategic acquisitions of local liquidity providers, exchanges and FIAT to crypto gateways).
Additionally, CZ has never hidden his ambitions to make a comeback on the Chinese market neither (Binance officially launched its DEX in China last April).
Market Manipulation?
By acquiring CMC, Binance takes one more step toward the competition. Potentially, with an ability to monitor, supervise and adjust the reported trading volume by other Exchanges, as many are using market manipulation techniques such as wash trading in order to increase their reported volume and get on top of CMC’s rankings.
The use of such techniques is made possible due to a lack of independent supervision and local regulations.
A detail with a huge impact:
Binance is, at the time of writing, ahead the competition both in daily trading volumes and daily visits . Buying out CMC is likely to allow the Giant to secure itself a permanent seat at the top of the liquidity rankings of Aggregator, and to increase its power and visibility over competition.
Ultimately, it may have an important effect on traders when looking at choosing an Exchange (high liquidity playing an important role) on CMC, while Binance will now probably always be seating at the top.
If it appears that if Binance ambition is to reaching a form of monopoly, surprisingly, crypto users seems not worry to hear about an increasing centralization of the market by the trading platform.
