Why does coaxial cable cause this effect?
The coax cable shielded the signal line between the antenna and the receiving circuit, which is how it reduces extraneous pickup.  Note that this does nothing about extraneous signals picked up by the antenna itself.

The reason it attenuated signals from the "antenna" is because it adds some capacitance from the signal line to ground.  It looks like what you are calling a antenna is really just a capacitive pickup.  The capacitance from the source signal to this pickup will be small, so the small capacitance in the coax cable is large enough to form a significant voltage divider.