Coinbase has denied that there was a significant drop in Bitcoin (BTC) liquidity on its platform following the SEC’s lawsuit against Cumberland, a prominent market maker.
Coinbase Reports Stable Bitcoin Liquidity Despite SEC Lawsuit Against Cumberland
In response to reports of decreasing market depth, Coinbase stated in a statement that BTC trading conditions remained stable on its exchange throughout October.
A Coinbase spokesperson explained in an email to CoinDesk that BTC-USD market depth of 2%, a key liquidity metric, was not affected.
The statement comes shortly after the SEC accused Cumberland of operating as an unregistered broker following Kaiko’s analysis indicating a 46% drop in 2% BTC market depth on Coinbase.
Kaiko Report Points to Liquidity Shift in US Stock Markets
Kaiko’s report on Monday noted that BTC depth dropped from 494 BTC to 267 BTC in the hours after news of the SEC lawsuit broke, suggesting that even smaller orders could affect Coinbase’s BTC price.
The 2 market depth metric measures the total buy and sell orders within 2% of the mid-market price, indicating the market's ability to handle large trades with minimal slippage.
The report also highlighted a difference in market behavior:
- The increase in buy orders while the sell-side depth is decreasing suggests that market makers are likely adjusting their positions in anticipation of price movements.
Kaiko added that liquidity declines were also experienced on other U.S. exchanges following the lawsuit, and that overall market liquidity remained below pre-suit levels.
*This is not investment advice.
