The cryptocurrency community has witnessed a fair share of drama unfold over the years. 2022 didn’t fall short in living up to this ‘grabbing headlines’ or ‘making heads turn’ narrative either. Here’s the latest gossip or so-called rumour for the day…
One of the world’s biggest cryptocurrency exchanges, Coinbase is seeing a liquidity crisis following leaked emails. A report dated 16 July shared this development, one that has left the crypto-community in splits. The publication reported emails from three different creators, also revealing that the exchange will temporarily shut down its affiliate program.
What on Earth!
Different enthusiasts have shared their narratives on several social media platforms. Be it FUD or not, this development is significant, which could make or break the already damaged asset class.
Popular attorney John Deaton also shed light on this event in a series of tweets.
The reason is obvious. A Coinbase Bankruptcy would set the crypto industry back 5 years – or more.
The public perception of crypto being a scam would grow exponentially. Instead of smart and tailored regulation, we would likely get oppressive regulations.
— John E Deaton (206K Followers Beware Imposters) (@JohnEDeaton1) July 16, 2022
In fact, he went on to add,
“Coinbase bankruptcy must be avoided AT ALL COSTS, b/c if depositors lost all or part of their money or crypto, we simply cannot overestimate the fallout.”
Reel 2 Real
Fair to say that investors and even the community at large remain uncertain following this development. Now, whether this is true or not, Coinbase’s on-chain indicators did take a big hit.
First of all, look at Coinbase’s Stablecoin Reserves on CryptoQuant. Between 15-16 July, around 50% of stablecoins, amounting to approx. $250M on Coinbase Pro, left the exchange.
On the contrary, only around 1% of stablecoin reserves left Binance over the same period.
Volumes of stablecoin holdings on exchanges or stablecoin inflows are seen as a short-term indicator of bullish action. This, unfortunately, isn’t the case with Coinbase when compared to its #1 rival.
In addition to this, Bitcoin held on each exchange underlined a drastic difference. Coinbase saw a steady decline in Bitcoin in its reserves, while Binance saw an incline during the same period.
A compilation of these aforementioned data sets could imply or suggest that the exchange is in trouble.
Divided by sentiment(s)
While these figures as well as a few crypto-enthusiasts’ sentiments raise red flags over this scenario, many others have supported the exchange.
Kraken’s Dan Held, for instance, tweeted, “Coinbase doesn’t have a liquidity crisis,” while the developer responsible for the Coinbase affiliate program, NJ Skobene, clarified the program’s removal is not a warning sign.
As the guy that literally set up the affiliate program in 2019, shutting it down has nothing to do with liquidity.
— NJ skoberne (@howdoyousaynejc) July 16, 2022