Coinbase Institutional has signaled a potential recovery for cryptocurrency markets in December, highlighting improvements in liquidity and macroeconomic shifts that could favor risk assets such as Bitcoin, currently priced at $89,682.35. The firm shared insights in a market note from December 6, emphasizing the increased likelihood of a Federal Reserve rate cut in the upcoming week. The probabilities for a rate cut are now pegged at 93% on Polymarket and 86% on the CME’s FedWatch tool, which Coinbase cites as a key factor in the anticipated market rebound.
Additionally, Coinbase’s internal M2 index, designed to track monetary flows impacting asset prices, indicates that liquidity conditions are on the rise. The firm had forecasted a sluggish November, followed by a rebound in December based on similar indicators. They also identified several supportive elements that could bolster the rally, including the expected collapse of the so-called AI bubble—an event that has yet to materialize—and a weakening U.S. dollar.
Despite some fluctuation throughout the week, Bitcoin managed to recover from its lowest points, aided by institutional developments. Notable news includes Vanguard’s decision to reverse its stance on crypto ETFs and Bank of America permitting its wealth advisers to recommend allocations of up to 4% of client portfolios in cryptocurrencies. This growing institutional interest may serve as a catalyst for a stronger market performance as December unfolds.
