Coinbase Customers Withdraw $248M Stablecoins Amid Liquidity Fears

Zinger Key Points
  • Around 50% of Coinbase Pro's stablecoin reserves was withdrawn on July 15
  • Liquidity fears began circulating after a report that Coinbase is closing its affiliate marketing program.

Coinbase Global Inc COIN customers recently withdrew a significant portion of their holdings after rumors of a potential “liquidity crisis” began circulating on social media.

What Happened: On-chain data from CryptoQuant, first reported by CryptoSlate, revealed that $248 million of stablecoins left Coinbase on July 15. Essentially, the exchange lost 50% of its stablecoin reserves on Coinbase Pro in a single day. 

Comparatively, exchanges like Binance only saw 1% of stablecoin reserves withdrawn on the same day.

After peaking at $1.2 billion in January, stablecoin reserves on Coinbase are now down to just $284 million. Meanwhile, Binance’s stablecoin reserves exceed $16 billion and remains on a steady uptrend since 2019. 

Coinbase traders began withdrawing their stablecoins after a report from Business Insider that the exchange would shut down its affiliate marketing program. 

“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,” an email from Coinbase to Insider reportedly stated.

This move comes after Coinbase said it was “phasing out” the Coinbase Pro exchange and moved to merge its USD and USDC order books to enable “deeper liquidity.”

Some market participants believed these measures were indicative of a potential liquidity crisis at the exchange, while others pointed out that Coinbase still has $6 billion in cash on its balance sheet, as well as a significant amount of cryptocurrency reserves. Last week, CEO Brian Armstrong took to Twitter to explain four factors that would help Coinbase “win” in this environment. 

Still, amid the growing liquidity concerns, some customers reported being unable to withdraw funds from the exchange.

Price Action: According to data from Benzinga Pro, COIN shares traded 0.60% higher after hours on Friday. 

Bitcoin BTC/USD was trading at $21,045 at press time, up more than 1% over 24 hours.

Ethereum ETH/USD and Dogecoin DOGE/USD were at $1,360 and $0.064, gaining 1.75% and 0.34%, respectively over the same period.

Photo by 24K-Production on Shutterstock

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Posted In: CryptocurrencyNewsTop StoriesMarketsMediaBitcoinBrian ArmstrongEthereumStablecoin
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