Youtube convert my video on bad quality
This is just a result of the compression that Youtube chooses to apply.  Your initial data rate for the video (3.5 megabits for an SD video) is exceptionally high and not really designed for streaming.  Youtube probably sees that it is only an SD stream and then drops the bit-rate accordingly.

It may not be possible to get better quality since Youtube's system decides what compression settings to apply for their transcode, however you could try submitting videos which match with Youtube's suggested transcode settings and that might help.