Coinbase Sees Potential Crypto Recovery as Liquidity Improves and Fed Rate-Cut Odds Rise
Coinbase Institutional projects a possible crypto rebound in December, citing stronger liquidity and shifting macro conditions that could favor risk assets such as bitcoin.
In a Dec. 6 note, the firm highlighted the increasing probability of a Federal Reserve rate cut next week—93% on Polymarket and 86% on CME FedWatch—as a key catalyst for the market.
Liquidity conditions are improving as well, according to Coinbase’s internal M2 index, which tracks monetary flows that influence asset prices. The firm had earlier anticipated a weak November followed by a rebound based on similar indicators.
Other potential tailwinds include a still-unfolding AI bubble and a weaker U.S. dollar.
Bitcoin, while lower on the week, recovered from recent lows, likely supported by institutional developments such as Vanguard’s crypto ETF policy reversal and Bank of America allowing wealth advisers to allocate up to 4% of portfolios to crypto.
