Coinbase market share surprisingly slips after Binance settlement — even as stock surges 20%

Binance’s settlement with the US Department of Justice will help Coinbase gain market share.

That’s the reasoning that analysts say has helped the exchange’s stock jump over 21% in the wake of its rival’s $4.3 billion settlement.

That optimism might be overdone, say analysts at investment bank Mizuho.

Let’s dig in!

Declining market share

Trading volumes are up on Coinbase in November, but the exchange has failed to capitalise on its rival’s regulatory woes.

Coinbase market share fell 0.3% following the Binance settlement last week, according to Mizuho data.

Binance, the largest crypto exchange by volume, averaged over $11 billion per day in November leading up to its settlement with US authorities last Tuesday.

This accounts for up to 30% of the top 30 crypto exchanges, Mizuho said. Since the settlement, daily volumes fell to an average of $9 billion a day, the investment bank said.

Coinbase failed to scoop up traders who fled Binance.

The crypto exchange’s market share declined to 4.0% from 4.3% in the days after the settlement.

The decline comes as Coinbase’s share price soared following the settlement — up 21% to around $128. Shares in the crypto exchange are now up over 250% in 2023.

Coinbase’s trading volume picked up despite the falling market share. Mizuho raised its estimate for Coinbase’s fourth quarter trading volume to $130 billion from $108 billion.

The investment bank also raised its revenue estimates for Coinbase, up to $871 million for the quarter, from $779 million.

The bank revised its price target to $35 from $31, but maintains an “underperform” rating on the exchange.

Needham and Co has been more positive on the crypto exchange. Maintaining a “buy” rating and a price target of $120.

The investment bank said Coinbase has exited the crypto winter in a better position than the previous cycle, when it went public in 2021. It also noted that competitors like FTX and Bittrex are gone, while Binance “is in retreat.”

Crypto market movers

• Bitcoin fell 0.8% to around $37,750.
• Ethereum dropped 1% to trade just above $2,000.

What we’re reading

• Arbitrum’s DAO says its token should earn a yield — others aren’t convinced — DL News
• Crypto lobbyists descend on Capitol Hill amid fresh push for ‘insanely overbroad’ rules — DL News
• Ronaldo Faces Lawsuit For Promoting Crypto Exchange Binance — Milk Road
• U.S. Treasury Imposes Sanctions On Crypto Mixer Sinbad Linked To Axie Infinity Hack Laundering — Milk Road
• Bitcoin Will Reach Its Old Highs With ETF Approval, Galaxy’s Novogratz Predicts — Bloomberg

Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.