Crypto exchange competitors Coinbase and Bybit have emerged as major beneficiaries after Binance reached a $4 billion settlement with U.S. authorities last week.
According to Kaiko research analyst Riyad Carey, despite recording more than $1 billion in outflows following the settlement, Binance showed no signs of a sharp decline in liquidity, with the exchange’s market depth increasing following the settlement.
U.S. authorities, including the Justice Department, Treasury Department, and Commodity Futures Trading Commission, reached a settlement with Binance last week, concluding a criminal investigation into alleged money laundering and sanctions violations and marking one of the largest corporate settlements in U.S. history. The settlement included a $4.3 billion fine and criminal charges against former CEO Changpeng Zhao, who resigned as part of the plea deal.
Coinbase and Bybit are the main winners.
Coinbase has been one of the beneficiaries, at least in terms of stock price. Coinbase’s stock was already performing well in November and was ignited by Binance payments, Carey said. COIN surged more than 75% in one month.
COIN is currently trading at $130.36, up more than 250% year-to-date and reaching its highest level in 18 months, according to TradingView.
COIN/USD price chart. Image: TradingView.
Bybit, which uses a proxy for Bitcoin as the non-stable coin with the highest trading volume, was an “immediately noticeable winner” in terms of post-settlement market share, Carey added. transaction. Given Binance’s extreme dominance, a market share drop of up to 4% during a given period of time resulted in gains of up to 50% for Bybit and up to 34% for Coinbase.
In particular, Coinbase’s share rose the most after settlement outside of US trading hours, while OKX rose more during the opening day of trading in Western Europe. Other U.S. exchanges performed poorly overall, Carey added.
The overall impact means Binance has ceded some market share to Coinbase and Bybit overall during non-U.S. hours, Carey said.
Percentage change in BTC market share. Image: Kaiko.
He added that despite losing market share, Binance maintained its position in terms of liquidity across the cryptocurrency market. However, while Bybit is closing the gap, Coinbase is still slightly behind in terms of spread competitiveness.
looking ahead
The immediate impact of Binance’s settlement helped Coinbase and Bybit, but early trends did not appear to be severe for Binance either, Carey said.
Despite theories that Binance may continue to lose market share to competitors, Carey argued that strengthened compliance and AML/KYC measures could improve trust in the exchange. User loyalty to a familiar platform despite the presence of other exchanges indicates the elasticity of customer preferences and the stability of liquidity and trading volume.
Earlier this week, Coinbase told some of its customers that it had received subpoenas from U.S. regulators related to Bybit, which introduced another interesting dynamic to the competition among cryptocurrency exchange competitors, Carey said.
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