Coinbase has responded to allegations of a significant decrease in Bitcoin (BTC) liquidity on its platform following the Securities and Exchange Commission’s (SEC) lawsuit against Cumberland, a prominent market maker. The company has stressed that the trading conditions for BTC have remained stable throughout October. A spokesperson from Coinbase clarified that the BTC-USD market depth at 2%, a crucial measure of liquidity, has not been affected.
This statement comes in response to claims made by Kaiko, which reported a 46% decline in the 2% market depth after the SEC accused Cumberland of operating as an unregistered broker. Kaiko’s analysis revealed that BTC depth dropped from 494 BTC to 267 BTC shortly after the announcement of the lawsuit, suggesting that even minor transactions could impact prices on Coinbase.
The 2% market depth metric indicates the overall volume of buy and sell orders near the mid-market price, demonstrating the market’s ability to accommodate significant trades with minimal slippage. The report also observed a trend of increasing buy orders alongside a decline in sell-side depth, indicating that market makers may be positioning themselves in anticipation of price movements. Overall, liquidity across U.S. exchanges has decreased since the lawsuit, remaining below levels seen prior to the legal action.