Debunking the ‘I smell a liquidity crisis’ narrative for Coinbase

ambcrypto.com:

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.

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.

— 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.”

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,