Coinbase Says Crypto Could Be Entering a December Recovery Phase

Crypto markets may be laying the groundwork for a meaningful recovery, according to a new outlook from Coinbase Institutional.

The firm suggests that several forces – improving liquidity, shifting macro expectations, and a growing probability of Federal Reserve rate cuts – are beginning to line up in favor of digital assets.

As of December 4, traders are assigning a 92% chance that the Federal Reserve will cut rates, a dramatic jump that historically fuels renewed interest in crypto and other risk-oriented assets. Coinbase argues that this shift, combined with patterns they identified earlier this year, could set the stage for a December rebound.

Back in October, the firm predicted a positioning reset and expected a soft November before a potential reversal into December. With those conditions now playing out almost point for point, Coinbase believes the market may be sitting at the front end of that inflection.

Liquidity Trends Turn Higher, Supporting a Risk-On Environment

One of the key indicators Coinbase tracks – a global M2 liquidity gauge – has begun rising again after dipping earlier in the year. M2 expansions have historically aligned with strong crypto performance, especially for Bitcoin, which tends to benefit when global liquidity increases. As that metric climbs, institutional allocators often re-enter the space, and systematic macro traders typically follow.

The firm also notes that fears of cooling risk appetite due to an “AI bubble” have proven unfounded. Instead, AI-driven equities and infrastructure plays remain robust, reinforcing the broader risk cycle. At the same time, the prevailing short-USD theme continues to draw capital into non-dollar assets, creating another channel through which liquidity can flow into crypto.

Why December Could Be a Turning Point

Coinbase views the recent pullback as a healthy reset rather than a sign of deterioration. Their earlier research suggested that such a pattern often precedes renewed strength as markets transition into year-end. Now, with liquidity rising, macro expectations flipping supportive, and prices stabilizing across major assets, conditions appear to be aligning for potential upside.

If momentum does begin to build through December, this period could ultimately be remembered as the start of a broader recovery phase heading into 2026 – particularly if global liquidity continues moving in the same direction.