Over the past decade, Coinbase has reached millions of crypto traders and expanded to become the largest crypto exchange in the United States. Despite its solid reputation, Coinbase hasn’t shied away from scrutiny and skepticism. That trend has intensified over the past two years as crypto prices have skyrocketed and fallen in short periods of time. However, what became a hot topic was the sudden collapse of FTX, which was once the world’s largest cryptocurrency exchange.
Nevertheless, the company remains an influential figure in the market. True believers consider cryptocurrencies, even though they are not a surefire inflation hedge. The inverse correlation between Bitcoin and inflation showed how much macroeconomic indicators can influence crypto prices. Traders continue to exploit the volatility of cryptocurrencies to generate huge profits.
Considering this, Coinbase enjoys high crypto asset balances. This formidable cryptocurrency exchange giant takes advantage of the weaknesses of its smaller peers. The inflow and outflow of funds can be overwhelming at times, but that liquidity allows you to sustain your business. Therefore, in this article, we will explain why Coinbase is a secure cryptocurrency exchange.
Why Coinbase is a safe and liquid cryptocurrency exchange
Beginners in cryptocurrency trading often look for exchanges with low transaction fees and secure user anonymity. But the more important consideration is whether you can sustain business operations with large transactions.
Having been in this business for over 10 years, we may not have to ask ourselves:Is coinbase safe?? ” It has experienced major ups and downs, such as the bursting of the virtual currency bubble from 2017 to 2018 and the FTX crash in 2022. Its liquidity and wise token allocation make it one of the most durable crypto exchanges. These are some of the reasons why Coinbase is a secure cryptocurrency exchange.
Stable monthly share
Since the collapse of FTX, we have seen how quickly Binance has taken control of the market. The company dethroned Coinbase and maintained a significant lead over its peers for an extended period of time.
Still, Coinbase showed that despite the huge drop in trader confidence, it is still not fading and will not become another FTX. Binance may be the giant now, but Coinbase is one of the original cryptocurrency exchanges. It has withstood the test of time even in the face of massive cryptocurrency market shocks in recent years.
But what makes the company a contender for a memorable crypto exchange is its stable market share. Market share in January 2023 is 6.97%. In just one month, the market share fell to 4.58%, its lowest market share in years.
It rebounded in the months that followed, but remained in the 5-6% range. However, from the second half of 2023 onwards, its market share is expected to increase continuously until it rises to his 6.2%. There have been some ups and downs, but they have been much more manageable than 2022.
At the end of the year, the market share increased again to 6.34%. As of today, it is recorded at 6.35%. It may be lower compared to the same period last year, but it is much better than last month. The sustained recovery shows that we can withstand challenges and regain momentum even in the face of stiff competition. This is truly a resilient crypto exchange.
And when compared to other exchanges, Coinbase is one of the exchanges that has shown the most stable market share change over the past year. Let’s take Binance as an example. Although it remains the largest exchange, its market share has fallen from 59% in January 2023 to 35% now, and has already lost about 25%.
This may be due to a recent controversy in which the company admitted fault for violating US anti-money laundering laws. Therefore, competitors such as Coinbase, OKX, and Upbeat are taking advantage of this to generate more traders.
high crypto balance
Another factor to consider is the liquidity and availability of digital assets. Given the right balance of major cryptocurrencies, Coinbase remains a huge cryptocurrency exchange. These include Bitcoin (BTC) and Ethereum (ETH).
Coinbase is the second largest cryptocurrency exchange by total Bitcoin balance. At the time of writing this article, 411,762.68 Bitcoin, or 2.2% of the total market circulation. It is also a close second to Binance, which is the top Bitcoin holder with 554,836.88 Bitcoins, accounting for 2.8% of the total market volume.
Bitfinex is a close third with 388,742.04 and 2.0% of total market supply. The top three Bitcoin exchanges are far behind OKX in fourth place with just 132,678.97 (0.7%).
Regarding Ethereum, the total balance on Coinbase is 2,185,579.12, or 1.8% of the total circulating supply. It ranks third after Binance and Bitfinex with 3,770,920.82 (3.1%) and 2,349,649.56 (2.0%). Kraken is in fourth place with 1,691,412.27 coins, accounting for 1.4% of the total number of coins in circulation. These four largest Ethereum holders are much larger than OKX in fifth place with 945,955.80 (0.8%).
Among other cryptocurrencies, Coinbase has the largest reserves. Ranked 2nd in USDC. 516,852,821.09, However, it is much lower than Binance’s 1,454,578,122.56. This was a big difference from 3rd place OKX with 157,577,919.60 points. The remaining exchange balance with USDC is less than 100 million.
For smaller cryptocurrencies, Coinbase remains popular as it is one of the top 10 holders of reserves. Some examples include DAI (5th place – 2,848,007.58), USDT (9th place – 35,157,653.02), SKL (7th place – 7,393,205.74), USDP (4th place – 482,327.81).
Considering this, it appears that Coinbase has sufficient liquidity levels to sustain a large volume of trades. This is an important aspect to consider in a highly volatile market.
Wise token allocation
Traders should also consider their dependence on a particular token or coin. FTX, once the largest cryptocurrency exchange, may have ignored this important aspect. Its reliance on proprietary tokens led to its unexpected downfall in 2022. This caused capital outflows at many other exchanges, and Coinbase was no exception.
On a lighter note, Coinbase does not appear to be developing another FTX, given its high balance of various cryptocurrencies. It does not rely heavily on a single cryptocurrency. It holds a variety of cryptocurrencies and is among the top 10 exchanges for many of the cryptocurrencies it holds.
Like most crypto exchanges, Bitcoin remains the richest in reserves. This is a very important token as it is widely accepted by many companies around the world. Ethereum is his number two, which is also used for corporate and government transactions. Many government agencies accept Ethereum contracts for services.
These two cryptocurrencies are essential in various states, especially Texas, which is the ninth largest economy in the world. Therefore, please follow the following requirements and processes. Forming an LLC in Texas It’s even easier with cryptocurrency payments.
Therefore, Coinbase can withstand mass outflows of a single cryptocurrency. Thankfully, its high liquidity can help cover lost capital while refocusing other reserves.
Important points
Coinbase has experienced peaks and troughs since its founding 10 years ago. It has a long way to go before it can compete with Binance, but it has great potential to outperform the third and second place companies. Its existence for more than a decade speaks to its resilience and prudence. Therefore, this crypto exchange promises security for crypto traders.
This is a guest post by Ivan Serrano. The opinions expressed are entirely their own and do not necessarily reflect the opinions of his BTC Inc or Bitcoin Magazine.
