US Crypto Mid-Tiers Collapse: Market Share Vanishes as Leaders Dominate in 2026

Woofun AI reports that the US crypto exchange landscape in 2026 is defined by extreme consolidation, where mid-tier platforms are rapidly losing ground to dominant leaders amid a prolonged bear market. The regulatory environment remains stagnant, with the highly anticipated CLARITY Act stalling in the Senate, leaving the industry without the clarity many had hoped for. This lack of legislative progress, combined with a harsh macroeconomic backdrop, has created a survival crisis for smaller players, while the market leader, Coinbase, continues to expand its share despite overall industry contraction. The divergence between the top player and the rest of the field is widening, signaling a structural shift in how value is captured in the digital asset space.

The macro market conditions have been unforgiving, with Bitcoin losing over 30% in the first half of the year and briefly breaking below the $60,000 mark. This price action was accompanied by a more than 20% shrinkage in spot trading volume across the industry for two consecutive quarters, reflecting a broader retreat in retail and institutional activity. Even Coinbase, the market leader, reported a loss of over $750 million in just six months, highlighting the severity of the downturn.

However, the impact on smaller exchanges has been disproportionately severe, as they lack the scale and diversified revenue streams to weather such volatility. The data suggests that the bear market is not just a temporary dip but a fundamental reset that favors only the most resilient and capitalized entities.

Gemini's financial performance illustrates the depth of the crisis for mid-tier exchanges. In the second quarter, the company reported total revenue of $45.5 million, a 37% increase year-on-year, but this growth was misleading. Exchange-related revenue, the core of its business, dropped 38% to just $12.5 million, while spot trading volume plummeted from $11.3 billion in the same period last year to $3.8 billion, a 66% decline. The only bright spots were side businesses like credit cards, staking, and OTC services, with credit card revenue reaching $16.2 million, up 231% year-on-year. Despite these ancillary gains, Gemini incurred a net loss of $107.7 million in the second quarter, bringing its cumulative loss for the first half of the year to $217 million. The platform's assets also shrank dramatically, falling from $18.2 billion a year ago to $8.4 billion, indicating a significant loss of user trust and capital.

Operational challenges further compounded Gemini's financial woes. The credit card business, which had shown promise, ran into serious problems with identity fraud, leading the company to set aside $20.1 million in provisions for transaction losses in the second quarter. These issues, which began in the first quarter, escalated rapidly, forcing Gemini to make drastic operational cuts. On February 5, the company announced it would withdraw from the UK, EU, and Australian markets, abandoning years of overseas expansion efforts.

Additionally, Gemini cut 40% of its workforce from the peak level in the third quarter of 2025, leaving only 402 employees by the end of the quarter, while marketing expenses were reduced by 45% year-on-year. These measures were necessary to stem the bleeding but signaled a retreat from its previous growth ambitions.

The financial strain on Gemini was so severe that it required a bailout from its founders. In May, the Winklevoss brothers injected $100 million into the company through their fund at a price of $14 per share. While this move was framed as a vote of confidence, the market interpreted it as a sign that the company could no longer raise funds externally. The timing was unfortunate, as the value of the Bitcoin held by the company subsequently declined, adding another impairment to the books and pushing Gemini's adjusted EBITDA in the second quarter to -$74 million, worse than in the first quarter. Stock prices reflected this distress, with Gemini's shares down over 88% from their peak of $45.89 on the first day of trading in September last year, when it went public at $28. The stock has fallen 56% so far this year, and Citi lowered its target price to $4 in April, maintaining a "sell" rating.

Woofun AI data shows that Bullish presents a more complex case, with a diversified revenue structure that includes media outlets like CoinDesk, index approval rights, and events such as Consensus. In the second quarter, Bullish's adjusted revenue was $92.6 million, up 62% year-on-year, with subscription and service revenue reaching a record $62.7 million. Morgan Stanley and Grayscale both used CoinDesk's indexes to develop their products, contributing to this growth. The company posted an adjusted net profit of $14.3 million in the second quarter, turning a loss into a profit.

However, the IFRS-based financial statements tell a different story, with the company incurring a net loss of $280 million in the second quarter, mainly due to a $245 million fair value impairment on the Bitcoin held in its reserves. Sales of digital assets dropped 44% year-on-year, indicating that institutional trading activity is also shrinking.

CEO Tom Farley's strategy is to pivot away from traditional exchange services and toward tokenized securities. In May, Bullish announced at the Consensus Miami conference that it would acquire securities registration and settlement firm Equiniti for around $4.2 billion, with delivery expected by early 2027. The goal is to cover the entire lifecycle of tokenized securities, from issuance and listing to trading and tracking. On August 12, the company launched its own tokenized stock trading platform and received approval from Gibraltar's regulatory authorities.

Despite these ambitious plans, the capital market has not responded positively. Bullish went public at $37 in August last year, with its stock closing at $70 on the first day. Now, it trades between $23 and $27, down more than 30% from the issue price, with a 35% decline so far this year. Zacks assigned a "sell" rating after reviewing the earnings report, reflecting skepticism about the company's ability to execute its new strategy.

eToro has taken a different approach, gradually shifting away from crypto trading and back to its traditional business of stocks, commodities, and forex. In the second quarter, eToro posted a net profit of $229 million, up 9% year-on-year, with an adjusted EBITDA of $78 million and a profit margin of 34%. The company had $1.2 billion in cash on hand and also carried out a buyback of $87 million in shares.

However, crypto-related transactions contributed only $11 million to eToro's net income in the second quarter, after accounting for $2 million in impairment of the company's own crypto holdings. In contrast, traditional asset classes contributed $142 million, up 25% year-on-year. In fact, in the first quarter, commodity trading already accounted for 60% of eToro's commission revenue, with trading volume nearly quadrupling year-on-year. The capital market responded well, with eToro's stock rising about 17.6% so far this year, outperforming the S&P 500. TD Cowen lowered its target price from $55 to $35 after reviewing the earnings report. In July, eToro announced it would acquire brokerage firm TradeZero for up to $230 million, further moving toward becoming a retail brokerage in the US.

Bakkt, on the other hand, has struggled to find its footing. The company sold off its loyalty and trust services in 2025 and focused entirely on crypto infrastructure and stablecoin payments. In April, it completed the acquisition of DTR, pursuing a B2B model based on regulatory approvals and stablecoin settlements.

However, Bakkt's revenue in the second quarter was $170.1 million, a 70% plunge year-on-year. These $170.1 million in revenue were matched by $169.3 million in costs, resulting in almost zero gross profit. In the first half of the year, Bakkt handled only $410 million in total crypto trading volume, yet management maintained its full-year target of $2.5 billion, meaning it needs to achieve five times that volume in the second half. This aggressive target seems unrealistic given the current market conditions, and Bakkt's planned new businesses have yet to show any progress, while its core crypto trading business has nearly hit rock bottom.

Coinbase continues to dominate the market, capturing an increasing share of the shrinking pie. In the first quarter, Coinbase's revenue was $1.41 billion, down 31% year-on-year, with a net loss of $394 million. In the second quarter, revenue dropped to $1.2 billion, accompanied by another loss of $360 million, failing to meet Wall Street expectations for three consecutive quarters. In May, Coinbase announced layoffs of 700 employees, accounting for 14% of its total workforce.

Yet two figures stand out: in the first quarter, Coinbase's global crypto trading volume share reached an all-time high of 8.6%, and in the second quarter, this figure rose further to 10.3%, showing growth for three consecutive quarters. As the overall market volume shrinks, Coinbase's share continues to rise, meaning the costs of this contraction are being disproportionately borne by smaller players. Gemini's spot trading volume dropped 66%, Bullish's digital asset sales fell 44%, while Coinbase's revenue decline was significantly smaller than the industry average.

Coinbase still had an adjusted EBITDA of $208 million in the second quarter, staying positive for 14 consecutive quarters. Its stablecoin revenue alone reached $292 million in that quarter, suggesting that the prediction market it launched less than half a year ago could generate $100 million in annual revenue. For the same new business, Gemini projected only $500,000 in revenue for the second quarter. This marks a clear trend where scale becomes a moat, concentrating liquidity, brand strength, and compliance capabilities among the leaders.

The survival strategies of mid-tier exchanges, including credit cards, prediction markets, stock trading, tokenized securities, and stablecoin payments, are unlikely to offset the collapse in core trading revenues, which have fallen by 40% to 70%. eToro's pivot to traditional assets offers a viable path, while Bullish's bet on tokenized securities may not pay off until 2027. Gemini relies on founder funding, and Bakkt struggles with a 70% revenue drop. If the market does not recover in the second half of 2026, these smaller exchanges may face existential threats.