(Bloomberg) -- The doubling of Coinbase Global Inc.’s stock since the end of June is masking one of the biggest concerns for investors -- the largest US cryptocurrency exchange is losing ground.

Coinbase’s market share fell to 6.3% in July from 10.7% in January, as measured by global spot trading volume among the top 15 crypto exchanges, according to data from CryptoCompare.  

While this year’s market downturn has crimped trading volume for all major exchanges, Coinbase has suffered more than some of its peers. Retail users, whose trading activity makes up the majority of its revenue, are sitting on the sidelines. And Coinbase missed -- perhaps for the best, as users may have avoided taking on risk -- a trading-volume spike in May connected to the downfall of Luna, a token it didn’t support. Meanwhile, some of its competitors are pushing derivatives products and offering lower fees.

Decentralized crypto exchanges such as Uniswap and other competitors can cater “to more crypto-native audiences, which have stayed around during the bear market versus Coinbase’s customer base, which skews more to first-time crypto users,” said John Todaro, an analyst at Needham & Co., who has a “buy” rating on the shares.   

The recent doubling in Coinbase’s stock should be viewed over a longer horizon. The shares are still down more than 60% this year in the wake of the collapse of experimental blockchain Terra and the bankruptcy of key players like hedge fund Three Arrows Capital. Coinbase rose 2.7% to $96.84 as of 10:06 a.m. in New York. 

Since the start of the year, Coinbase has seen a 57.2% decline in spot trading volume. That’s larger than the 12.9% decline for Binance Holdings Ltd, according to CryptoCompare data. Binance remains the world’s largest cryptocurrency exchange, with its market share rising to 54% in July.

“There is a larger amount of trading volume moving offshore as high volume traders and market makers seek diversification overseas with derivatives and other products that aren’t currently available in the US,” Emilie Choi, chief operating officer at Coinbase, said on a conference call Tuesday after the company reported a second-quarter loss of $1.1 billion. 

Within the US, Coinbase’s competition continues to ramp up. Binance US rolled out zero-free trading for Bitcoin, which made up 31% of Coinbase’s trading volume in the second quarter. FTX US is adding equities trading to target a broader base of users. 

For its part, Coinbase recently struck a deal for Bitcoin trading with BlackRock, the world’s largest asset manager. BlackRock clients will be able to use its Aladdin investment-management system to oversee their exposure to Bitcoin along with other portfolio assets such as stocks and bonds, and to facilitate financing and trading on Coinbase’s exchange.

“As retail trading within the cryptocurrency markets continues to slow, and exchange competition continues to rise, we expect that Coinbase will have to look for new avenues to capture new trading volumes -- such as their recent partnership with BlackRock,” said Jacob Joseph, a research analyst at CryptoCompare. “The reduction of trading fees, which are higher than competitors’ like Binance and FTX, could also help drive additional retail volumes to the platform.”

(Updates share price the fifth paragraph.)

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