diff --git a/fuel-txpool/src/containers/dependency.rs b/fuel-txpool/src/containers/dependency.rs
index 761f0cbc569..faabceca1e9 100644
--- a/fuel-txpool/src/containers/dependency.rs
+++ b/fuel-txpool/src/containers/dependency.rs
@@ -392,17 +392,16 @@ impl Dependency {
 
                             Self::check_if_coin_input_can_spend_db_coin(&coin, input)?;
                         }
-
                         max_depth = core::cmp::max(1, max_depth);
-                        db_coins.insert(
-                            *utxo_id,
-                            CoinState {
-                                is_spend_by: Some(tx.id() as TxId),
-                                depth: 0,
-                            },
-                        );
                     }
-
+                    // mark this coin as spent by the current tx
+                    db_coins.insert(
+                        *utxo_id,
+                        CoinState {
+                            is_spend_by: Some(tx.id() as TxId),
+                            depth: max_depth - 1,
+                        },
+                    );
                     // yey we got our coin
                 }
                 Input::MessagePredicate { message_id, .. }
diff --git a/fuel-txpool/src/txpool/tests.rs b/fuel-txpool/src/txpool/tests.rs
index 7f771bc8843..0c4ff665b2f 100644
--- a/fuel-txpool/src/txpool/tests.rs
+++ b/fuel-txpool/src/txpool/tests.rs
@@ -525,6 +525,54 @@ async fn more_priced_tx3_removes_tx1_and_dependent_tx2() {
     assert_eq!(vec.removed[1].id(), tx2.id(), "Tx2 id should be removed");
 }
 
+#[tokio::test]
+async fn more_priced_tx2_removes_tx1_and_more_priced_tx3_removes_tx2() {
+    let mut rng = StdRng::seed_from_u64(0);
+    let mut txpool = TxPool::new(Default::default());
+    let db = MockDb::default();
+
+    let (_, gas_coin) = setup_coin(&mut rng, Some(&db));
+
+    let tx1 = Arc::new(
+        TransactionBuilder::script(vec![], vec![])
+            .gas_price(10)
+            .add_input(gas_coin.clone())
+            .finalize_as_transaction(),
+    );
+    let tx2 = Arc::new(
+        TransactionBuilder::script(vec![], vec![])
+            .gas_price(11)
+            .add_input(gas_coin.clone())
+            .finalize_as_transaction(),
+    );
+    let tx3 = Arc::new(
+        TransactionBuilder::script(vec![], vec![])
+            .gas_price(12)
+            .add_input(gas_coin)
+            .finalize_as_transaction(),
+    );
+
+    txpool
+        .insert_inner(tx1.clone(), &db)
+        .await
+        .expect("Tx1 should be OK, got Err");
+    let squeezed = txpool
+        .insert_inner(tx2.clone(), &db)
+        .await
+        .expect("Tx2 should be OK, got Err");
+    assert_eq!(squeezed.removed.len(), 1);
+    let squeezed = txpool
+        .insert_inner(tx3.clone(), &db)
+        .await
+        .expect("Tx3 should be OK, got Err");
+    assert_eq!(
+        squeezed.removed.len(),
+        1,
+        "Tx2 should be removed:{:?}",
+        squeezed
+    );
+}
+
 #[tokio::test]
 async fn tx_limit_hit() {
     let mut rng = StdRng::seed_from_u64(0);