The market may be entering the early stages of a recovery. Coinbase Institutional now argues that crypto could be positioned for a December turnaround, supported by improving liquidity conditions, sharply rising expectations for a Federal Reserve rate cut, and a set of macro trends that have begun shifting in favor of risk assets.
As of December 4, Fed cut probabilities have surged to 92%, creating a backdrop that historically encourages capital flow back into crypto.
The firm notes that conditions they highlighted in October, including a positioning reset and expected November weakness, are now aligning with the type of December reversal that often marks the beginning of a stronger trend.
It’s beginning to look a lot like a recovery.
We think crypto could be poised for a December recovery as liquidity improves, Fed cut odds jump to 92% (as of Dec 4), and macro tailwinds build.
Here’s why:
• Liquidity is recovering
• The supposed “AI bubble” hasn’t burst… pic.twitter.com/CpbfijdKWQ— Coinbase Institutional 🛡️ (@CoinbaseInsto) December 5, 2025
Liquidity Recovers as Macro Winds Turn Supportive
The chart shows Coinbase’s custom global M2 money supply index climbing steadily again after a mid-year dip. M2 growth is one of the cleanest indicators of global liquidity, and previous expansions in this metric have closely mirrored strong periods for Bitcoin and broader crypto markets. As liquidity improves, crypto typically becomes more attractive to both institutional allocators and systematic macro traders.
Coinbase also points out that fears of an “AI bubble” cooling the risk environment have not materialized. Instead, AI-linked equities and infrastructure plays remain strong, signaling that the broader risk cycle still has room to run. Meanwhile, short-USD trades continue to appeal at current levels, adding an additional incentive for foreign capital to rotate into non-dollar assets, including digital assets.
Why December Could Mark a Shift in Market Momentum
According to Coinbase, the retracement seen through November resembles a controlled reset rather than structural weakness. Their earlier research, which flagged this exact pattern, suggested that the market was preparing for a stronger move into year-end. With M2 rising, macro easing expectations strengthening, and crypto already showing signs of stabilization, the firm views December as a potential inflection point.
If momentum does reassert itself from here, this could become the starting line for renewed risk appetite heading into 2026, especially if liquidity conditions continue to improve at their current pace.