Trading conditions at Coinbase (COIN) remain stable, as the Nasdaq-listed cryptocurrency exchange downplayed reports regarding significant drops in Bitcoin (BTC) order book liquidity amid the SEC's lawsuit against Cumberland.

Coinbase stated, "We have not seen a material change or decline in BTC-USD depth at 2% throughout October," responding to concerns raised by Paris-based Kaiko, which reported a decline in liquidity following the SEC's legal actions.

BTC Market Liquidity Insights

Kaiko reported that the 2% BTC depth on Coinbase started declining sharply on October 10, dropping by 37% to 315 BTC. This decline suggests that smaller order sizes could move the spot price significantly.

According to Kaiko, bid depth for buy orders increased, while ask-side depth dropped, indicating that market makers are adjusting their strategies possibly anticipating a price drop. Other exchanges also experienced diminished liquidity, suggesting a broader trend across U.S. markets.

In response to these fluctuations, Cumberland reassured that their business operations remain unchanged despite the SEC's actions, affirming stability in their liquidity provisions. Kaiko further mentioned that liquidity seems to have recovered, potentially due to shifts in market expectations.