Recent data from research firm Kaiko has revealed a significant decline in Coinbase’s market share, with smaller exchanges making substantial gains in recent months. Earlier in the year, Coinbase held over half of the US crypto market share, reaching a peak of nearly 55% in March. However, the latest report shows that its market share has dropped to 41% in early September, down from 53% in June. The standout beneficiary of this shift has been Bullish, whose market share almost doubled from 17% to 33% over the same period.
Unlike Coinbase, Bullish primarily focuses on institutional clients and trading rather than retail investors. Launched in 2021 as a subsidiary of Block.one, Bullish is supported by PayPal co-founder Peter Thiel and gained attention recently for its purchase of Coindesk. This strategic positioning has allowed Bullish to capture a growing share of the US crypto market.
Consolidation of Major Players
In contrast to the growth of smaller exchanges, the top US exchanges have significantly expanded their market share since 2021. Kaiko’s data shows that the three largest exchanges by volume now control almost 90% of the market, up from 66% in April 2021. This consolidation is partly due to stricter regulations, reduced trading activity during the recent bear market, and the dominance of major players like Coinbase and Kraken in institutional crypto trading.
Coinbase’s declining market share coincides with British bank Barclays upgrading its stock COIN from underweight to equal weight. Analyst Benjamin Budish highlighted Coinbase’s growth through product expansion and improved economic outlook. Amid expectations of increased support for the crypto industry from US presidential candidates, Coinbase may benefit from a more favorable regulatory environment. However, uncertainties persist, especially regarding broader economic conditions and ongoing regulatory hurdles. Notably, Coinbase’s unresolved SEC lawsuit continues to cast a shadow over its operations.
Despite these challenges, Coinbase’s stock saw a 5% increase in early trading, indicating some positive sentiment. However, the company’s year-to-date performance shows a 10% decline, reflecting the challenges it faces in an evolving market landscape. As the crypto industry continues to mature and adapt to changing regulations, Coinbase will need to navigate these obstacles to maintain its competitive edge in the market.
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