The cryptocurrency exchange industry in the US has witnessed significant changes in recent months, with Coinbase experiencing a sharp decline in market share. According to a report by research firm Kaiko, Coinbase, which dominated over half of the US crypto market earlier this year, has seen its market share fall to 41% in early September, down from 53% in June. On the other hand, smaller exchanges like Bullish have gained ground, with Bullish’s market share nearly doubling from 17% to 33% over the same period.
Unlike Coinbase, which caters mainly to retail investors, Bullish primarily targets institutional clients and trading. Founded in 2021 as a subsidiary of blockchain firm Block.one and backed by PayPal co-founder Peter Thiel, Bullish has quickly gained prominence in the market. The firm’s recent acquisition of crypto-focused media outlet Coindesk has further solidified its position in the industry.
Top US exchanges have significantly expanded their market share since 2021, with the three largest exchanges now controlling nearly 90% of the market, up from 66% in April 2021. This concentration is attributed to 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.
Coinbase’s declining market share comes amidst regulatory challenges, including the unresolved Securities and Exchange Commission (SEC) lawsuit. However, British bank Barclays recently upgraded Coinbase’s stock, citing the exchange’s product expansion and improved economic prospects. With expectations of increased support for the crypto industry from US presidential candidates, Coinbase could potentially emerge as a winner in the regulatory shift.
Despite uncertainties surrounding the broader economic environment and ongoing regulatory challenges, Coinbase’s stock has shown resilience, with a 5% increase in early trading. However, the company’s year-to-date performance reflects a 10% decline, highlighting the volatility and unpredictability of the cryptocurrency market. As the industry continues to evolve and regulatory landscapes shift, exchanges like Coinbase will need to navigate challenges while capitalizing on opportunities to maintain their competitiveness.
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