In recent months, Coinbase has experienced a significant drop in market share, according to a report by research firm Kaiko. While Coinbase previously held over 50% of the US crypto market earlier in the year, its market share has now fallen to 41% as of early September. This decline has opened up opportunities for smaller exchanges like Bullish, whose market share nearly doubled from 17% to 33% over the same period. Unlike Coinbase, Bullish primarily focuses on serving institutional clients rather than retail investors.
Expansion of Top US Exchanges
Meanwhile, the top US exchanges have seen significant growth in their market share since 2021. According to Kaiko, the three largest exchanges now control nearly 90% of the market, a significant increase from 66% in April 2021. This expansion has come at the expense of smaller exchanges, whose market share has shrunk from 34% to 11%. Factors contributing to this shift include stricter regulations, reduced trading activity during bear markets, and the dominance of major players like Coinbase and Kraken in institutional crypto trading.
Coinbase’s decreasing market share coincides with British bank Barclays upgrading its stock rating for the company from underweight to equal weight. Analysts cite the exchange’s product expansion and improved economic outlook as reasons for this adjustment. However, regulatory uncertainty remains a concern, with unresolved lawsuits like the Securities and Exchange Commission (SEC) case casting a shadow over Coinbase’s operations. Market observers are closely watching how the upcoming US presidential election will impact the regulatory environment for the crypto industry, with potential implications for exchanges like Coinbase.
Despite these challenges, Coinbase’s stock saw a slight increase of about 5% in early trading, according to TradingView data. However, the company’s year-to-date performance shows a decline, with its stock down 10%. This mixed performance reflects the ongoing volatility in the cryptocurrency market and the uncertainty surrounding regulatory developments. Investors are closely monitoring how exchanges like Coinbase navigate these challenges and adapt to changing market dynamics.