In a recent report by research firm Kaiko, it was revealed that Coinbase, the leading cryptocurrency exchange in the US, has experienced a significant decline in market share. What was once a dominating force in the industry, with over half of the market share earlier this year, has now dwindled to just 41% in early September. This decline has paved the way for smaller exchanges, like Bullish, to gain ground and increase their market share from 17% to 33% over the same period.
The Emergence of Bullish
Unlike Coinbase, which caters mainly to retail investors, Bullish has focused on attracting institutional clients and traders. Founded in 2021 as a subsidiary of blockchain firm Block.one and backed by PayPal co-founder Peter Thiel, Bullish has quickly made a name for itself in the industry. Its recent acquisition of crypto-focused media outlet Coindesk has further solidified its position in the market.
According to Kaiko’s report, the top US exchanges have significantly expanded their market share since 2021, with the three largest exchanges now controlling nearly 90% of the market. This shift can be attributed to various factors, including stricter regulations, reduced trading activity during the bear market, and the dominance of major players like Coinbase and Kraken in institutional trading. The collapse of FTX in 2022 and the regulatory actions against Binance.US have also impacted the market share of smaller exchanges.
Coinbase’s Future Prospects
Despite its declining market share, British bank Barclays recently upgraded its rating of Coinbase’s stock from underweight to equal weight. Analyst Benjamin Budish noted that Coinbase has shown maturity through product expansion and improved economic prospects. With a more favorable regulatory environment on the horizon and potential support from US presidential candidates for the crypto industry, Coinbase could emerge as a winner in this regulatory shift. However, uncertainty remains, especially with ongoing regulatory challenges and the unresolved SEC lawsuit looming over the exchange.
Coinbase’s stock has seen a slight increase of about 5% in early trading, according to TradingView data. However, its year-to-date performance has been disappointing, with the stock down by 10%. The company faces a challenging road ahead as it navigates the changing dynamics of the cryptocurrency market and strives to regain its lost market share. Only time will tell if Coinbase can adapt to these challenges and emerge stronger in the ever-evolving world of cryptocurrency exchanges.