Coinbase Sees December Crypto Recovery as Liquidity Improves and Fed Cut Odds Rise
Coinbase Institutional said crypto markets may stage a December recovery, citing improving liquidity and rising odds of a Federal Reserve rate cut as primary catalysts. The firm’s internal M2 index indicates better monetary flows that typically support risk assets such as bitcoin. Markets priced a ~93% chance of a near-term Fed easing on Polymarket and ~86% on the CME FedWatch at the time of the note. Coinbase also noted secondary tailwinds: a weaker U.S. dollar, institutional developments (Vanguard’s crypto ETF policy reversal and Bank of America permitting up to 4% crypto allocations for wealth advisers), and the potential unwinding of an overextended AI bubble. Bitcoin had recovered from recent lows amid these headlines. Key keywords: Coinbase, crypto recovery, liquidity, Fed rate cut odds, bitcoin BTC.
Bullish
The note signals bullish implications: improving liquidity (Coinbase’s M2 index), higher odds of a near-term Fed rate cut, and positive institutional flows are classic tailwinds for risk assets like bitcoin. Historical parallels: past periods when liquidity improved and rate-cut expectations rose (e.g., 2020–2021 stimulus cycles) correlated with sustained crypto rallies. Short-term impact: likely increased buying interest and reduced volatility as institutional headlines (Vanguard, BofA) draw capital into the market and bid up prices. Traders may see momentum plays and higher correlations with macro risk-on moves. Long-term impact: if liquidity and institutional allocation trends persist, structural demand for bitcoin could strengthen, supporting higher price floors. Caveats: the view depends on Fed action being realized, macro surprises (inflation, geopolitics) or a sudden risk-off could reverse gains quickly. Also, references to an "AI bubble" and policy reversals are supportive but not guarantees—market sentiment can shift rapidly, so risk management (position sizing, stops) remains critical.