Coinbase has projected an optimistic outlook for the cryptocurrency market, anticipating a recovery phase in December as liquidity conditions improve and selling pressure from long-term Bitcoin holders decreases. This assessment comes in light of recent market shifts, where signs of renewed capital inflows, tighter spreads, and a more supportive macroeconomic environment have emerged.
Central to Coinbase’s analysis is the expectation of a Federal Reserve interest rate cut, with current predictions indicating nearly a 90 percent chance of a reduction during the December 10 meeting. This outlook marks a notable shift from the liquidity drought that the market experienced in October and November. The Federal Reserve’s latest figures reveal that M2 money supply has surged to a record $22.3 trillion, surpassing its early 2022 peak following a rare multiyear contraction. Analysts frequently monitor M2 data to gauge changes in liquidity and inflation expectations, suggesting that increased liquidity correlates with improved performance in Bitcoin, due to its limited supply of 21 million coins.
Additionally, Coinbase hinted that diminished dollar positioning could attract risk-averse investors back to crypto markets. The ongoing momentum of artificial intelligence investments further supports the flow of capital into digital asset sectors that are intertwined with automation and computing demands.
On-chain metrics provide further validation of this positive sentiment. Darkfost, a researcher at CryptoQuant, reported a significant decline in sales activity from Bitcoin wallets that have been held for over five years. The average daily sales from these long-term holders have dropped to approximately 1,000 BTC, down from around 2,350 BTC on a 90-day moving average. This trend suggests that the selling pressure from investors who accumulated Bitcoin at lower price points, particularly near $30,000, is easing.
The researcher noted decreases in unspent transaction outputs (UTXOs) and overall selling activity, indicating reduced strain on the market as it progresses through its cycle. “This data suggests that selling pressure from OGs is easing, which gives the market a bit more breathing room,” he explained. As the selling from these original holders diminishes, it creates an opportunity for Bitcoin to stabilize after a tumultuous autumn.
In summary, the combination of improved liquidity, favorable macroeconomic indicators, and reduced selling pressure from long-term investors sets a promising stage for December. If these trends continue, Bitcoin could aim for its first positive December conclusion since 2023, signaling a potential shift in market sentiment for the crypto landscape.
