Is Coinbase safe? Detailed review and data.

Ritu13

In the past decade, Coinbase has reached millions of cryptocurrency traders and expanded to become the largest cryptocurrency exchange in the United States. Despite its good reputation, Coinbase has not been immune to scrutiny and suspicion. This has been exacerbated over the past two years due to the significant fluctuations in cryptocurrency prices. However, what has become a hot topic is the sudden collapse of FTX, the world's largest cryptocurrency exchange.

Nevertheless, Coinbase remains influential in the market. True believers argue that cryptocurrency is not a reliable hedge against inflation. The negative correlation between Bitcoin and inflation suggests how much macroeconomic indicators can influence cryptocurrency prices. Traders continue to leverage the volatility of cryptocurrencies to generate significant profits.

Given this, Coinbase enjoys a high cryptocurrency balance. This powerhouse of a cryptocurrency exchange exploits the weaknesses of its smaller counterparts. Inflows and outflows may sometimes be overwhelming, but its liquidity ensures its ability to maintain operations. Therefore, this article will explain why Coinbase is a secure cryptocurrency exchange.

What makes COINBASE a secure and liquid cryptocurrency exchange?

As a newcomer to cryptocurrency trading, people often look for exchanges with low trading fees and user anonymity. But a more important consideration is whether it can sustain its operations through a high volume of trades.

Having been in this industry for over a decade, we may not need to ask ourselves, "Is Coinbase safe?" It has experienced significant fluctuations, such as the cryptocurrency bubble burst of 2017-2018 and the aftermath of FTX in 2022. Its liquidity and prudent token allocation make it one of the most durable cryptocurrency exchanges. Here are some reasons why Coinbase is a secure cryptocurrency exchange.

Stable monthly market share

Since the collapse of FTX, we have seen how Binance quickly took over the market. It dethroned Coinbase and maintained a significant lead over its peers for a long time.

Even so, Coinbase has shown that despite a significant drop in trader confidence, it has not been shaken and will not become another FTX. While Binance may now be the giant, Coinbase was one of the original cryptocurrency exchanges. It has stood the test of time and faced significant disruptions in the cryptocurrency market in recent years.

But what makes it a memorable competitor in the cryptocurrency exchange is its stable market share. In January 2023, its market share was 6.97%. It plummeted to 4.58% in just one month, hitting the lowest market share in years.

It rebounded over the next few months, staying in the range of 5-6%. However, since the second half of 2023, we have seen its market share continue to grow, reaching 6.2%. Although there have been some fluctuations, it's much easier compared to 2022. By the end of the year, the market share rose again to 6.34%. As of today, it stands at 6.35%. While it may decline year by year, it's much better than the previous months. The sustained rebounds indicate its ability to withstand challenges in fierce competition and regain momentum. It's indeed a resilient cryptocurrency exchange.

If we compare it to other exchanges, Coinbase's market share changes over the past year have been the most stable. Take Binance, for example. It remains the largest exchange, but after dropping from 59% in January 2023 to 35% today, it has lost about 25% of its market share.

We can attribute this to recent controversies, namely its admission of violating the US Anti-Money Laundering Act. As a result, its close competitors like Coinbase, OKX, and Upbeat capitalized on it to attract more traders.

High cryptocurrency balances

Another factor to consider is the liquidity and availability of digital assets. With its substantial balances in major cryptocurrencies, Coinbase remains a massive cryptocurrency exchange. These include Bitcoin (BTC) and Ethereum (ETH).

Coinbase ranks as the second-largest cryptocurrency exchange by total Bitcoin balance. As of writing, it holds 411,762.68 BTC, accounting for 2.2% of the total market circulating supply. The gap between it and the largest Bitcoin holder, Binance, is also small, with the latter holding 554,836.88 BTC, representing 2.8% of the total market share.

Bitfinex ranks third with 388,742.04 BTC, accounting for 2.0% of the total market supply. The top three Bitcoin exchanges have a significant lead over the fourth-ranked OKX, which holds only 132,678.97 BTC or 0.7% of the share.

Regarding Ethereum, Coinbase's total balance is 2,185,579.12, representing 1.8% of the total circulating supply. It ranks third behind Binance with 3,770,920.82 (3.1%) and Bitfinex with 2,349,649.56 (2.0%). Kraken ranks fourth with 1,691,412.27, accounting for 1.4% of the total coin supply. These top four Ethereum holders far exceed OKX, which ranks fifth with 945,955.80 or 0.8%.

Even with other cryptocurrencies, Coinbase holds one of the largest reserves. It ranks second in USD