Coinbase Predicts Crypto Rebound as Liquidity Strengthens and Fed Rate-Cut Expectations Rise

Coinbase Sees Potential Crypto Recovery Amid Improving Liquidity and Rising Fed Rate-Cut Odds

Coinbase Institutional has highlighted a potential crypto market recovery in December, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.

In a market note dated Dec. 6, the firm pointed to the rising probability of a Federal Reserve rate cut next week—currently priced at 93% on Polymarket and 86% on CME’s FedWatch—as a key catalyst for the recovery.

Coinbase also noted that liquidity conditions are improving, based on its internal M2 index, which tracks monetary flows that influence asset prices. The firm had previously forecast a weak November followed by a rebound, citing similar indicators.

Additional tailwinds highlighted in the note include a still-unfolding AI bubble and a weaker U.S. dollar, both of which could support upward momentum.

Bitcoin, though down on the week, managed to recover from its lows, potentially boosted by institutional developments such as Vanguard’s crypto ETF policy reversal and Bank of America allowing wealth advisers to allocate up to 4% of portfolios to crypto.

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