Coinbase Stock Rebound Obscures Market Share Loss to Peers
The doubling of Coinbase Global Inc. share price since the end of June is covering one of the biggest concerns for investors - the largest U.S. Digital Asset Exchange is losing ground.
Coinbase Exchange is market share dropped to 6.3% in July from 10.7% in January 2022, as measured by global spot trading volume among the top 15 Cryptocurrency Exchange platforms, according to data from Crypto Compare.
While this year is Crypto Market slump has crumpled trading volume for all major crypto exchange platforms, Coinbase Exchange has suffered more than some of its peers. Retail user trading, whose trading volume makes up the majority of the company is total revenue, are sitting on the sidelines. And Coinbase Exchange missed -- perhaps for the best, as retail users may have avoided taking on risk, a trading-volume growth in May 2022 connected to the collapse of Luna, a token it did not support. Meanwhile, some of its peers are pushing derivatives products and offering lower transactional fees.
Also Read: Coinbase Exchange Is Rapid Rise Left It Exposed In Crypto Winter
Decentralized Cryptocurrency Exchanges such as Uniswap and other peers can cater “to more cryptocurrency-native audiences, which have stayed around during the bear market run versus Coinbase Exchange is customer base, which skews more to first-time cryptocurrency users,” said John Todaro, an analyst at Needham & Co., who has a “buy” rating on the shares.
The recent doubling in Coinbase Exchange is stock should be observed over a longer horizon lens. The share price is still down more than 60% this year in the wake of the collapse of experimental Blockchain Terra USD and the bankruptcy proceedings of key players crypto lender and hedge fund Three Arrows Capital. Coinbase Exchange share price rose 2.7% to $96.84 as of 10:06 a.m. in New York.
Also Read: Binance Exchange Overtakes Coinbase Exchange: Holds The Most BTC
Since the start of the year, Coinbase exchange has seen a 57.2% decline in spot trading volume. Thats larger than the 12.9% decline for Binance Exchange, according to CryptoCompare data. Binance Exchange remains the world’s largest Cryptocurrency Exchange platform, with its market share rising to 54% in July 2022.
“There is a larger amount of trading volume moving offshore as high-volume traders and market makers seek diversification overseas with derivatives and other products that aren’t currently available in the US,” Emilie Choi, chief operating officer at Coinbase Exchange, said on a second quarter earnings conference call on Tuesday after the company reported a Q2 loss of $1.1 billion.
Also Read: Coinbase Exchange Faces SEC Investigation Over Its Crypto Listings
Within the US, Coinbase Exchange is competition continues to ramp up. Binance US exchange rolled out zero-fee trading for Bitcoin, which made up 31% of Coinbase is trading volume in the second quarter. FTX US Exchange is adding equities trading to target a broader base of retail users.
For its part, Coinbase Exchange recently struck a partnership deal for Bitcoin trading with BlackRock, the world is largest asset management firm. BlackRocks clients will be able to use its Aladdin investment-management system to oversee their exposure to Bitcoin along with other portfolio holdings such as stocks and bonds, and to facilitate financing and trading on Coinbase Exchange.
Also Read: Insider Trading Was Common At Coinbase Exchange, A New Study Argues
“As retail trading within the crypto markets continues to slow, and exchange platform competition continues to rise, we expect that Coinbase exchange will have to look for new avenues to capture retail trading volumes - such as their recent partnership with BlackRock,” said Jacob Joseph, a research analyst at CryptoCompare. “The decrease of trading fees, which are higher than competitors like Binance Exchange and FTX Exchange, could also help drive additional retail trading volumes to the exchange platform.”
Leave a Comment