According to JPMorgan analysts, Coinbase’s trading volume increased in the first weeks of 2023. Conversely, other exchanges continue in their downward trend. Which proves that after the demise of FTX, Coinbase’s reputation as a reliable exchange is starting to pay off.
Coinbase benefits from the collapse of FTX
The average daily volume (ADV) of the US-based cryptocurrency exchange increased by 0.3% year-on-year. It thus reached $1.6 billion in January, a modest but notable gain. According to data from JPM, other US exchanges, including Kraken and Gemini, saw declines of 13% and 46%, respectively.
As a reminder, Coinbase has seen a steady reduction in activity in 2022. As such, the slight increase in trading volume certainly suggests a trend reversal…
Indeed, after the disappearance of its rival FTX, Coinbase is on the rise. It now takes full advantage of its status as one of the most trusted stock exchanges in the United States.
The collapse of FTX has brought scrutiny to unregulated exchanges in the market. As a result, Coinbase seems to be one of the last choices for investors who want to trade cryptocurrencies without running a high risk of fraud. On the other hand, its rivals, including Binance and Gemini, are facing fallout.
The year 2022 has not been kind to Coinbase
Oppenheimer expects Coinbase’s revenue to fall sharply from $7.8 billion in 2021 to $3.2 billion in 2022. By the end of February, Coinbase is expected to announce their results of the fourth quarter.
In early January, Oppenheimer’s projections were released a day before Coinbase said it would cut its workforce by 20%, or around 950 workers. It should be noted that the exchange had laid off more than 1,000 workers in June.
In perspective, since Binance offers a more regulated and compliant platform, it seems to be in a good position to succeed.
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