The landscape of cryptocurrency exchanges has been experiencing a significant shift in market share dynamics, according to a recent report by research firm Kaiko. Coinbase, once the dominant player in the US crypto market with over 50% market share in March, has seen a decline to 41% by September. On the other hand, Bullish, a newer player focusing on institutional clients, has managed to nearly double its market share from 17% to 33% during the same period.
Expansion of Top Exchanges
In contrast to the decline of smaller exchanges, the top exchanges in the US have been expanding their market share significantly since 2021. Kaiko’s report reveals that the top three exchanges now control almost 90% of the market, a significant increase from 66% in April 2021. This consolidation of market power can be attributed to various factors such as stricter regulations, reduced trading activity during the bear market, and the dominance of major players like Coinbase and Kraken in institutional trading.
Despite the challenges and uncertainties in the market, Coinbase has received a boost from British bank Barclays, which upgraded its stock rating from underweight to equal weight. Analyst Benjamin Budish highlighted Coinbase’s maturity through product expansion and improved economic prospects. The exchange is expected to benefit from a more favorable regulatory environment, especially with potential support from US presidential candidates for the crypto industry. However, Budish warned about the lingering uncertainty regarding the broader economic landscape and ongoing regulatory hurdles, including the unresolved SEC lawsuit against Coinbase.
Despite the positive news from Barclays, Coinbase’s stock performance has been a mixed bag. While it saw a 5% increase in early trading, the year-to-date performance shows a 10% decline. This volatility in performance reflects the challenges and opportunities facing Coinbase and the broader crypto market. As the market continues to evolve and regulatory landscape shifts, exchanges like Coinbase will need to adapt and innovate to maintain their competitive edge in the industry.
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