- Coinbase Institutional sees potential for a December crypto market recovery driven by better liquidity and favorable macroeconomic signals.
- Expectations for a Federal Reserve interest rate cut next week are cited as a key factor, with probabilities above 85% on major betting platforms.
- Improved liquidity is indicated by Coinbase’s internal M2 index, which gauges monetary flow impacts on asset pricing.
- Additional support may come from a weakening U.S. dollar and the delayed collapse of an anticipated Artificial Intelligence investment bubble.
- Bitcoin experienced some rebound after a poor week, potentially helped by institutional moves like Vanguard’s crypto ETF stance reversal and Bank of America permitting crypto allocations in wealth portfolios.
Coinbase Institutional released a market note on December 6 forecasting a possible recovery in cryptocurrency markets this month. The firm highlighted improving liquidity and shifting macroeconomic conditions that could encourage investment in risk assets such as bitcoin.
The note pointed to rising expectations of a Federal Reserve interest rate cut, with probabilities reaching 93% on Polymarket and 86% on the CME’s FedWatch tool (Polymarket, CME FedWatch). Such a monetary policy move could enhance market sentiment toward cryptocurrencies.
Improved liquidity conditions were observed using Coinbase’s proprietary M2 index, which measures monetary flows influencing asset prices. This indicator previously helped the firm anticipate a weak November followed by a market rebound.
The note also cited other positive factors, including a softer U.S. dollar and the non-occurrence of a projected burst of the artificial intelligence (AI) investment bubble. These elements may provide additional momentum for crypto assets.
Bitcoin, although declining overall during the week, managed to recover from its lowest points. This rebound might be linked to institutional developments such as Vanguard reversing its crypto ETF policy and Bank of America authorizing its wealth advisers to allocate up to 4% of client portfolios to cryptocurrencies.
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