In the aftermath of Binance’s historic $4 billion settlement with U.S. authorities, a reshaping of the cryptocurrency exchange landscape has taken place, with Coinbase and Bybit emerging as the principal winners, according to insights from Kaiko research analyst Riyad Carey.
While Binance experienced over $1 billion in outflows following the settlement, it maintained resilience in liquidity, registering an increase in market depth post-settlement. Coinbase, already on an upward trajectory, witnessed a surge of over 75% in its stock price during November, driven further by Binance’s settlement news. Coinbase’s stock (COIN) reached its highest level in 18 months, currently trading at $130.36, marking a year-to-date increase of more than 250%.
Bybit, positioned as an immediate standout winner in terms of market share post-settlement, observed a growth of over 20% in 16 out of 24 hours following the Binance deal. Coinbase’s share experienced significant growth outside U.S. trading hours, while other U.S. exchanges faced challenges. Despite the loss in market share, Binance maintained liquidity across crypto markets, with Bybit narrowing the gap and Coinbase slightly lagging in spread competitiveness.
The dynamics post-settlement have led to Binance ceding some market share to Coinbase in non-U.S. hours and Bybit across the board. While theories suggest a potential ongoing loss in market share for Binance, enhanced compliance measures and improvements in Anti-Money Laundering (AML) and Know Your Customer (KYC) practices could bolster trust in the exchange. Customer loyalty to familiar platforms, despite alternatives, signals stability in liquidity and trading volumes.
As the competitive landscape evolves, recent developments include Coinbase revealing receipt of a subpoena related to Bybit from a U.S. regulator, introducing a new layer of complexity to the competitive dynamics between these prominent crypto exchanges.