Bybit Now Second-Largest Crypto Exchange
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Bybit has experienced significant growth due to several factors, including the introduction of U.S. spot Bitcoin ETFs, a decline in Binance’s market share, low transaction fees, and an expanding derivatives market.
The Singapore-based cryptocurrency exchange Bybit has surpassed its competitor, the U.S.-based Coinbase, becoming the second-largest digital asset trading platform after Binance.
A report from the crypto analytics platform Kaiko reveals that Bybit’s market share increased from 8% to 16% since October 2023, while Coinbase’s share saw a modest increase of 1% during the same period. Bybit overtook Coinbase in March to claim the position of the second-largest crypto exchange.
Bybit’s Rise to Second-Largest Exchange
Bybit’s growth can be attributed to several factors, including the launch of spot Bitcoin ETFs in the United States and a decline in Binance’s dominance due to regulatory issues.
Kaiko’s analysis indicates that although both incidents led to increased trading volumes across most crypto exchanges, Bybit benefitted the most, with a significant surge in trading volumes.
In contrast, Coinbase experienced only a minor increase despite reporting higher profits and revenue.Binance is not the only exchange facing a decline in market share due to regulatory challenges. 
Platforms like Upbit and OKX have also seen reduced volumes for unspecified reasons. Binance’s market share dropped from 60% to 54% following a $4.3 billion settlement with U.S. authorities in late 2023.
Competitive Fees and Rising Market Share
Bybit’s growing transaction volumes are not solely due to Binance’s challenges and the U.S. spot Bitcoin ETF market.
Kaiko points out that Bybit’s competitive transaction fees and an increase in Bitcoin (BTC) and Ether (ETH) transaction market shares also play a significant role.
Bybit offers some of the lowest transaction fees in the crypto market, comparable to OKX and Binance. Similar to other exchanges that offer zero-fee promotions for certain assets, Bybit introduced zero fees for USD Coin (USDC) in February 2023.
Additionally, Bybit’s BTC and ETH spot trade volume market share has grown from 17% to 53% since 2023. This increase in spot market share is supported by Bybit’s expanding derivatives market, which has been the second-largest after Binance since 2023.
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