The latest report from research firm Kaiko reveals a significant shift in market share among crypto exchanges, with Coinbase experiencing a sharp decline in recent months. Once dominating over 50% of the US market earlier this year, Coinbase’s market share has now fallen to 41% in September. On the other hand, Bullish, a newer player in the market, 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 institutional clients and trading. Established in 2021 as a subsidiary of Block.one, Bullish is backed by prominent figures like PayPal co-founder Peter Thiel. The acquisition of crypto media outlet Coindesk has further solidified Bullish’s position in the market.
While smaller exchanges have seen a decline in their market share, the top US exchanges have significantly expanded their dominance since 2021. The three largest exchanges now control nearly 90% of the market, up from 66% in April 2021. Factors contributing to this shift include stricter regulations, reduced trading activity during the bear market, and the influence of major players like Coinbase and Kraken in institutional crypto trading.
Despite its declining market share, there are positive signs for Coinbase’s future. British bank Barclays recently upgraded Coinbase’s stock from underweight to equal weight, citing the exchange’s product expansion and improved economic prospects. Analysts believe that Coinbase could benefit from a more favorable regulatory environment, especially with increasing support for the crypto industry from potential US presidential candidates.
However, uncertainties remain for Coinbase, particularly surrounding ongoing regulatory challenges and the unresolved Securities and Exchange Commission (SEC) lawsuit. While Coinbase’s stock has seen a slight increase in early trading, its year-to-date performance has dipped by 10%. The collapse of FTX in 2022 and regulatory actions against Binance.US have also impacted the market dynamics, further highlighting the challenges faced by crypto exchanges in the current landscape.
The rise of Bullish and the decline of Coinbase signify a significant shift in the crypto market, with newer players attracting institutional clients and expanding their market share. As the industry continues to evolve, regulatory uncertainties and market dynamics will play a crucial role in shaping the future of crypto exchanges.
