Coinbase Predicts Crypto Recovery in December Amid Improving Liquidity and Fed Rate Cut Expectations
Coinbase Institutional anticipates a potential recovery in the cryptocurrency market this December, driven by improving liquidity and macroeconomic conditions favorable to risk assets such as bitcoin. This outlook is supported by market pricing which currently factors in a Federal Reserve rate cut next week, with probabilities around 93% according to Polymarket and 86% according to the CME FedWatch tool.
Recent developments include Vanguard's reversal on its crypto ETF policy and Bank of America allowing advisers to recommend crypto allocations of up to 4% in portfolios, both cited as contributing factors to bitcoin’s rebound. Coinbase also highlights improving liquidity through its internal M2 index, which tracks monetary flows impacting asset prices, reflecting a pattern of weakness anticipated in November followed by a subsequent rebound.
Additional positive factors include the anticipated bursting of the AI bubble and a weaker U.S. dollar, which are expected to provide further tailwinds for crypto assets. Despite bitcoin rising from intraday lows on news of institutional developments, it remained lower over the course of the week overall.
