Fears Of Coinbase Going Down Surge After Affiliate Program Shut Down
- Coinbase could face liquidity issues as leaked emails state the suspension of its affiliate program
- $248M in stablecoins went out of Coinbase, which accounted for 50% of the total
Since Friday, the crypto community has been facingdealing with rumors that the exchange giant Coinbase could face serious liquidity issues following emails leak. The email stated that it would suspend its affiliate program, whereas Business Insider reported that the emails read:
“This has not been an easy decision, nor was it made lightly, but, due to crypto market conditions and the outlook for the remainder of 2022, Coinbase is unable to continue supporting incentivized traffic to its platform.”
Notably, as per the on-chain data from CryptoQuant, on July 15, around half of the stablecoins on Coinbase Pro, worth around $248 million, left the exchange. This large percentage of stablecoin outflow was much higher than that of other exchange giants. For instance, Binance only witnessed 1% of its stablecoin reserves leave the exchange over the same time period. However, the value of 1% of the reserve was similar in value at just below $300 million.
Moreover, if one compares the value of stablecoin holdings between the two exchanges, the decrease in stablecoins held on Coinbase is much greater than that on Binance. Interestingly, Binance never saw a reduction in its stablecoin holdings since 2019, while Coinbase’s stablecoin holdings peaked at around $1.2 billion in January 2022 but now went down to just $284 million.
Moreover, the latter is seeing a steady decline in its Bitcoin reserves while the former is continuously increasing its BTC holdings in the same period. However, the Coinbase graph appears to follow the overall market trend implying a decrease in Bitcoin holdings on Coinbase may simply be following the increasing trend of holding crypto in non-custodial wallets.
Though the picture does not display dramatic scenery but still worries many. The findings, along with the leaked emails, have created a subtle panic among some crypto community members who believe that the decision to suspend the affiliate program signifies a liquidity crisis for Coinbase.
CoinGeek’s Chief Bitcoin Historian, Kurt Wuckert Jr tweeted that the closing of Coinbase Pro, combined with its affiliate program suspension and USD and USDC markets merging, signifies a liquidity crisis in the company.
Notably, the exchange has recently trimmed off 18% of its global staff amid adverse market conditions. However, given the decline in the price of Bitcoin since January, Coinbase’s cost-cutting measures currently seem reasonable.
Interestingly, a majority of business experts have criticized people who have suggested that Coinbase is experiencing problems amid speculation of a crisis.
While the developer in charge of the Coinbase affiliate program, NJ Skobene, stated the program’s suspension was not a red flag, Kraken’s Director of Growth Marketing, Dan Held, tweeted, “Coinbase doesn’t have a liquidity crisis.”
Recently, Coinbase co-founder Brian Armstrong tweeted that the exchange is still adjusting to the development it obtained in 2021.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
