Expectations for a recovery in bitcoin prices in December are gaining traction, as Coinbase Institutional points to macroeconomic factors—including rising global M2 liquidity and anticipated interest rate cuts from the Federal Reserve—as key influences on the market.
According to Coinbase’s latest research, improved liquidity conditions in the financial landscape, coupled with a striking 92% probability of a Fed rate cut on December 4, could create favorable conditions for bitcoin. The firm’s custom global M2 money supply index, which tracks fiat currency supply, reinforces the idea that a reversal in market sentiment might occur in December, countering earlier predictions of continued weakness.
Despite these encouraging signs, Coinbase has observed a prevailing atmosphere of fear among investors. Both institutional and retail participants are showing reluctance to invest, maintaining a cautious stance that has left markets in a state of uncertainty, particularly with regard to recoveries in exchange-traded fund (ETF) inflows.
Market analysts are keeping a close eye on the Federal Reserve’s rate decision scheduled for December 10. There is speculation that this event could trigger a “Santa rally,” a phenomenon where short-term gains typically occur around the holiday season. Nic Puckrin, co-founder of Coin Bureau, highlighted the significance of the Fed’s actions in this context. He stated, “If the Fed cuts rates on December 10th, along with ending quantitative tightening, there’s little standing in the way of a Santa rally for Bitcoin—barring any major geopolitical bombshell.” However, he also warned that any hawkish comments from Fed Chair Jerome Powell could constrain the potential upside of such a rally.
On a technical level, the conditions for a potential recovery seem promising. Chris Kim, CEO of Axis, attributed the sell pressure seen in November to Powell’s earlier hawkish remarks but expressed optimism for a December rebound. He pointed to technical support levels near $80,000 and noted positive developments concerning ETFs that could bolster bitcoin’s recovery. Furthermore, Kim highlighted speculation surrounding Kevin Hassett potentially becoming the next Fed Chair, which could lead to a “more dovish” policy environment and further enhance bitcoin’s prospects.
As market participants await critical developments from the Federal Reserve, all eyes will be on the interplay of macroeconomic signals and sentiment that could influence bitcoin’s trajectory in the approaching month.
