In a recent report titled “Charting Crypto: Navigating Uncertainty,” Coinbase Institutional has outlined a cautiously optimistic outlook for the cryptocurrency market as the year approaches its end. The fourth-quarter analysis, produced in collaboration with Glassnode, reflects on the recent volatility observed following a market shakeout on October 10. According to the report, this downturn was exacerbated by significant leverage interacting with slim order books, which created conditions for auto-deleveraging on some exchanges, subsequently draining market liquidity.
Following the tumultuous period, Coinbase notes that prices began to stabilize over the weekend, albeit with an air of caution as macroeconomic anxieties emerged once more. Central to Coinbase’s analysis are liquidity conditions and macroeconomic factors. Their Global M2 Money Supply Index, which has historically shown to track Bitcoin and usually leads market movements by approximately 110 days, entered Q4 with favorable indicators. However, the report warns that tightening conditions could materialize later in the quarter.
Coinbase anticipates that the Federal Reserve may implement two additional rate cuts before the end of the year. This shift could encourage the migration of funds from money market accounts back toward riskier assets, which could, in theory, bolster crypto markets.
The infrastructure surrounding policy and market operations complements what Coinbase describes as a constructive market setup. Notably, stablecoin supply and monthly trading volumes are nearing record levels, signaling an increase in on-chain transactions. Furthermore, the firm highlights that the infrastructure for U.S. spot ETFs involving Bitcoin and Ether is continuously developing, enhancing accessibility for traditional investors and fostering market depth.
Coinbase maintains a favorable position towards Bitcoin, underscoring its status as “digital gold” amidst ongoing concerns regarding fiscal and monetary policies. Ether is also viewed positively, with advancements in scaling technology moving more activity to layer-2 networks and a decline in transaction fees contributing to improved sentiment since the year’s early months. An investor survey included in the report indicates that a majority of institutions remain bullish on Bitcoin over the next three to six months, although many identify the macroeconomic landscape as a key risk factor.
The report further examines the role of digital-asset treasury companies (DATs), portraying them as significant and relatively stable buyers of Bitcoin and Ether. This cohort now holds a considerable portion of the circulating supply, functioning as an essential demand source. However, Coinbase acknowledges ongoing uncertainties regarding the long-term business models of these entities, particularly in light of recent weakness in the equity markets.
While the report conveys an overall positive outlook, it does not overlook potential short-term challenges. Coinbase points to the absence of U.S. economic data amid the government shutdown, the risk of diminishing liquidity in November, and uncertainties surrounding DATs as factors necessitating careful positioning and disciplined time horizons for investors.
In summary, Coinbase Institutional concludes that despite the potential challenges ahead, favorable liquidity conditions, supportive policy developments, and increased on-chain activity—primarily driven by stablecoins and evolving ETF infrastructure—will likely lend support to the market as it approaches year-end. Should these favorable conditions persist, Bitcoin is seen as well-positioned to lead the charge.
