Trading volume on Coinbase increased in the first weeks of 2023, while other exchanges saw continued declines, JPMorgan analysts found, a sign that Coinbase’s reputation as a trustworthy exchange is wearing thin. its fruits after rival exchange FTX collapsed.
The US-based crypto exchange has seen a small but noticeable increase in average daily volume (ADV) of $1.6 billion so far in January, an increase of 0.3% from the previous quarter . In comparison, other US exchanges such as Kraken and Gemini saw declines of 13% and 46% respectively, according to JPM data.
The slight increase in Coinbase’s trading volume also signals a change in direction as the exchange has seen a continued decline in volume in 2022.
“We believe Coinbase has cultivated a reputation as a reputable and trusted intermediary for some time,” the JPMorgan analysts wrote. “We believe reputation helps drive market share as activity levels rebound.”
Coinbase’s competitors, including Binance and Gemini, are grappling with the ripple effects of FTX’s collapse, which has sparked increased scrutiny of unregulated exchanges in the industry, leaving Coinbase one of the few options allowing investors to trade cryptos without significant risk of fraud.
“Unlike a number of Coinbase’s top peers, Coinbase had no direct exposure to FTX and was immune to direct legal and reputational fallout from its demise,” JPM wrote.