Key Insights
- •The crypto market experienced a downturn in the weeks leading up to November but shows signs of a recovery in December.
- •Coinbase's research indicates a sharp rise in global liquidity at the start of December, with expectations for a Federal Reserve rate cut reaching 92% by December 4.
- •A significant increase in USDT deposits suggests traders are preparing to act, either by buying dips or repositioning their portfolios.
The crypto market traded downwards over the past few weeks since the start of November. However, various fundamental, policy, and on-chain metrics are pointing towards a recovery in crypto prices by the end of December.
Here are the top four reasons why the crypto market could pump soon.
Coinbase Sees Liquidity Jump and Possible Crypto Market Rebound
Coinbase released a research report indicating that December opened with a sharp rise in global liquidity. The firm noted that expectations for a Federal Reserve rate cut hit 92% by December 4. Analysts suggest this development could help the crypto market find support.
The report highlighted Coinbase’s global M2 money supply index, which shows a steady recovery heading into late 2025. The team added that a weaker dollar may provide fresh momentum to crypto prices.
Earlier in the year, Coinbase warned that October would spark a positioning reset and that November would likely remain soft.
Still, the exchange now believes a real reversal may finally be underway in December, with the supposed AI bubble not bursting and the rising attraction of USD trades.
Bitcoin Faces Liquidity Pressure Amid Federal Reserve Policy
In its latest outlook, Coinbase Institutional noted that the Fed has returned to the bond market. This suggests the final phase of quantitative tightening may be near.
This move often eases liquidity pressure, and analysts say this can support the crypto market and assets like Bitcoin. In November, Bitcoin dropped more than three standard deviations below its 90-day trend, while U.S. equities stayed closer to their normal range.
The report also highlighted that long-term holders engaged in a rare period of coin distribution, and crypto prices traded below net asset value for the first time this year. These signs suggest a potential recovery in December.
Analyst Ted Pillows had warned the U.S. 10-year yield may hit its biggest weekly gain since June 2025. He stated, "Despite the Fed cutting rates, the 10-year yield remains above 4%, which is not a good sign for risk-on assets."
Crypto Market: USDT Deposits Soar as Traders Brace for Volatility
Binance Exchange recorded 946,000 USDT deposits in the past seven days. OKX followed with 841,000, while Bybit saw 225,000.
An increase in stablecoin inflows usually signifies that crypto market traders are preparing to act. They could be getting ready to buy dips or reposition quickly during market swings.
CryptoQuant’s crypto market data shows USDt flows across exchanges on the Tron network. With whale selling and high BTC inflows, experts say this surge points to reactive trading, not long-term accumulation.
In uncertain times, stablecoin inflows often lead to higher volatility and may cause short-term price swings.
Stablecoin Strength Fades as Altcoins Hold Firm
Data from Altcoin Vector shows a gap between stablecoin dominance and altcoin performance. Historically, peaks in USDT dominance often occurred just before money moved back into higher-risk assets like the crypto market.
In recent weeks, stablecoins have started to weaken. Altcoins, however, have remained steady. Analysts suggest this may signal that traders are preparing to return once Bitcoin stabilizes.
If this rotation continues, altcoins could rally quickly. Past patterns indicate that liquidity moving toward risk assets often triggers sharp rallies in crypto prices.