Coinbase, one of the leading cryptocurrency exchanges in the United States, has experienced a noticeable decline in market share in recent months. According to a report by research firm Kaiko published on September 9th, Coinbase’s market share has dropped from nearly 55% in March to 41% in early September. This decline has allowed smaller exchanges like Bullish to gain ground in the competitive crypto market.
Bullish, a subsidiary of blockchain firm Block.one, has seen its market share nearly double from 17% to 33% over the same period. Unlike Coinbase, which primarily caters to retail investors, Bullish focuses on serving institutional clients and traders. The company, backed by PayPal co-founder Peter Thiel, made headlines recently for its acquisition of the crypto-focused media outlet Coindesk.
The top three exchanges in the US have significantly expanded their market share since 2021, now controlling nearly 90% of the market, up from 66% in April 2021. This consolidation has squeezed out smaller exchanges, whose market share has shrunk from 34% to 11%. Factors contributing to this shift include stricter regulations, reduced trading activity during the 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 rating from underweight to equal weight. Analyst Benjamin Budish highlighted Coinbase’s product expansion and improved economic prospects as reasons for the upgrade. Budish also mentioned that Coinbase stands to benefit from a more favorable regulatory environment, with increased support for the crypto industry expected from US presidential candidates.
Despite the positive outlook, uncertainties remain for Coinbase, including ongoing regulatory challenges and the unresolved Securities and Exchange Commission (SEC) lawsuit. The company’s stock has risen by 5% in early trading, but its year-to-date performance shows a 10% decline.
In conclusion, the cryptocurrency exchange landscape in the US is evolving, with Coinbase facing increased competition from smaller exchanges like Bullish. While regulatory challenges and market uncertainties persist, Coinbase remains a key player in the crypto market, poised to navigate these challenges and capitalize on emerging opportunities.
