In March, Bybit toppled Coinbase, becoming the second largest centralized cryptocurrency exchange (CEX) in the world after Binance. What are the reasons explaining the emergence of Bybit in this market sector?
Bybit and Binance: the happiness of some makes the misfortune of others
The introduction of spot Bitcoin ETFs in the United States has caused a surge in cryptocurrency trading volumes across the world. However, not all exchanges have benefited equally from this development.
In any case, Bybit stood out by overtaking Coinbase in March, becoming the second largest centralized cryptocurrency exchange (CEX) after Binance.
Since October, Bybit's market share increased from 8% to 16%, while Coinbase's market share increased by only 1% over the same period. Even more surprising, despite a reassuring agreement concluded by Binance with the SEC at the end of 2023, the latter declined, thus losing 6 points of market share.
This seems to indicate that the number 1 exchange has lost significant capital of trust in its setbacks with the American regulatory authorities.
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Figure 1 – Evolution of market shares of the main cryptocurrency exchanges
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An attractive strategic position and competitive advantages
Kaiko explains this trend by Bybit's competitive fees, which are among the lowest in the industry. However, this statement needs to be qualified since other exchanges like Binance and OKX also offer attractive fees and implement reward or promotion policies on fees.
Bybit's competitive advantage is therefore not only based on its attractive fees.
Bybit launched zero fees for USDC trading in February 2023, while Binance has been promoting TUSD and FDUSD over the past year
.
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Figure 2 – Top CEX Trading Fees
With the analysis of spot trading volumes by asset, it becomes evident that Bybit was driven up mainly by 2 cryptocurrencies: Bitcoin and Ethereum. Indeed, unlike Binance which has seen a volume decrease of 16% since last year, Bybit's market share has exploded by 36% since 2023 on the 2 major cryptos.
Figure 3 – Evolution of Bybit's market shares from 2023 to 2024 on the main cryptocurrencies
This trend is rather good news for the second in title, since altcoins are often more sensitive to market sentiment and therefore more likely to decline during bear markets, according to Kaiko. Bybit also strengthens its second place in the derivatives market, supporting strong and constant growth.
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