Rumors surfaced Friday night time that Coinbase might face liquidity points following leaked emails stating that it might droop its associates program. Enterprise Insider reported that they acquired emails stating;
“This has not been a simple choice, nor was it made flippantly, however, as a consequence of crypto market circumstances and the outlook for the rest of 2022, Coinbase is unable to proceed supporting incentivized visitors to its platform.”
Some took to Twitter to say the choice was indicative of liquidity issues for the highest US alternate. Kurt Wuckert Jr of CoinGeek tweeted that the suspension of the associates program, together with different selections made by Coinbase over the previous a number of weeks, signifies a “liquidity disaster” is looming.
On July 15, round 50% of stablecoins on Coinbase Professional left the alternate, in line with on-chain knowledge from CryptoQuant; the full worth got here to roughly $248 million. The share stablecoin outflow was considerably larger on Coinbase than on different exchanges equivalent to Binance. Solely round 1% of stablecoin reserves left Binance over the identical interval, however the tokens had an analogous worth at just below $300 million.
When the worth of stablecoins on the 2 exchanges is in contrast, the discount in stablecoins held on Coinbase contrasts with Binance. Stablecoins peaked at round $1.2 billion on Coinbase in January 2022, however now the worth stands at simply $284 million. On Binance, the worth stays in an upward development since 2019.
The information paints a much less drastic however nonetheless worrying image when evaluating the Bitcoin held on every alternate. Coinbase has seen a gentle decline in Bitcoin in its reserves, whereas Binance has been rising throughout the identical interval.
When all exchanges tracked by CryptoQuant are included, the Coinbase graph seems to observe the general trade development. The downtrend in Bitcoin held on Coinbase might merely be following the elevated reputation of getting crypto in non-custodial (unhosted) wallets.
Group defends Coinbase
Amid rumors of a disaster at Coinbase, a number of trade professionals have known as out these suggesting the alternate is in hassle. Kraken’s Dan Held tweeted, “Coinbase doesn’t have a liquidity disaster,” whereas the developer accountable for the Coinbase associates program, NJ Skobene, confirmed this system’s elimination was not a warning signal.
Because the man that actually arrange the associates program in 2019, shutting it down has nothing to do with liquidity.
— NJ skoberne (@howdoyousaynejc) July 16, 2022
Jungle Inc, a crypto YouTuber additionally tweeted that Coinbase has “$6 billion in money” and sizable crypto reserves. Nonetheless, his confidence began and led to the identical publish as he confirmed he had eliminated all funds from the alternate. The chance of holding on exchanges might seem heightened after Voyager and Celsius already went into chapter 11 this 12 months.
Coinbase has 6 billion in money + giant crypto reserves. They are going to be fantastic!
With that being mentioned I simply transferred all the pieces off. 🍾🍾🍾
— Jungle Inc 💥Regular Lads💥 #MMG (@jungleincxrp) July 16, 2022
On July 12, Brian Armstrong, Co-Founding father of Coinbase, tweeted that the corporate is “nonetheless adjusting” to the expansion it obtained in 2021. Will this development result in the downfall of one of many world’s most trusted exchanges? If it did, it might undoubtedly have a knock-on impact on the remainder of the trade. At present, Coinbase’s cost-cutting methods don’t appear excessive, given the drop within the worth of Bitcoin since January.
Coinbase grew a ton in 2021 and we’re nonetheless adjusting to that development. One of many loopy elements about our trade is that in any given 12 months we is likely to be rising 300-500% or -50%. It makes it extremely difficult to plan and culturally to soak up so many individuals throughout up intervals.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) July 12, 2022