According to JPMorgan analysts, Coinbase's trading volume increased in the first few weeks of 2023, while other exchanges continued to see reductions. This is evidence that, in the wake of the demise of competitor exchange FTX, Coinbase's reputation as a reliable exchange is beginning to pay off.
The average daily volume (ADV) of the U.S.-based cryptocurrency exchange has increased by 0.3% year over year to $1.6 billion so far in January, a modest but notable gain. According to JPM statistics, other U.S. exchanges including Kraken and Gemini had drops of 13% and 46%, respectively.
Given that Coinbase's exchange had a consistent fall in activity in 2022, the tiny increase in trading volume also suggests a reversal in trend.
“We think Coinbase has been cultivating a reputation as a reputable, trusted intermediary for some time, that reputation is helping to drive greater market share as activity levels rebound.”
In light of heightened scrutiny over unregulated exchanges in the market brought on by the collapse of FTX, Coinbase is one of the few choices left for investors to trade cryptocurrencies without running a considerable risk of fraud. Competitors of Coinbase include Binance and Gemini.
“Unlike a number of Coinbase’s high-profile peers, Coinbase did not have direct exposure to FTX and was insulated from the direct legal and reputational fallout from its demise.”
