Recent data from research firm Kaiko reveals a significant decline in Coinbase’s market share in the US crypto market. What was once a dominant force with over 50% market share earlier this year has now dropped to 41% in September. This shift has been accompanied by the rise of smaller exchanges, particularly Bullish, whose market share nearly doubled from 17% to 33% over the same period.
Unlike Coinbase, Bullish caters primarily to institutional clients and trading. Established in 2021 as a subsidiary of blockchain firm Block.one and backed by PayPal co-founder Peter Thiel, Bullish has made strategic moves like acquiring crypto-focused media outlet Coindesk. This focus on institutional clients seems to have paid off, as evidenced by the significant increase in market share.
Kaiko’s report also highlights the expansion of the three largest US exchanges, which now control nearly 90% of the market, up from 66% in April 2021. Smaller exchanges, on the other hand, have seen their share dwindle from 34% to 11%. Factors contributing to this shift include stricter regulations, reduced trading activity during market downturns, and the dominance of major players like Coinbase and Kraken in institutional crypto trading.
Coinbase’s declining market share comes amidst regulatory uncertainties and economic challenges. Despite British bank Barclays’ optimistic upgrade of Coinbase’s stock, citing improved product expansion and economic prospects, the exchange still faces unresolved issues, such as the Securities and Exchange Commission (SEC) lawsuit. The regulatory environment, though expected to become more favorable with increasing support for the crypto industry, remains a source of uncertainty for Coinbase and its competitors.
While Coinbase’s stock has seen a slight uptick in early trading, its year-to-date performance tells a different story, with the stock down 10%. Market observers are cautiously optimistic about the exchange’s future, especially with potential regulatory shifts in its favor. However, ongoing challenges and uncertainties, including regulatory actions against competitors like Binance.US, continue to cast a shadow over Coinbase’s operations.
Coinbase’s market share decline reflects a changing landscape in the crypto industry, with smaller exchanges gaining ground and regulatory challenges looming large. The exchange’s ability to adapt to these changes and navigate through uncertainties will determine its future trajectory in the market.
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