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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb

2025/12/06 23:46
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb

The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.

By Francisco Rodrigues|Edited by Stephen Alpher
Dec 6, 2025, 3:46 p.m.
Coinbase (Modified by CoinDesk)

What to know:

  • Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
  • The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
  • Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.

Coinbase Institutional has said crypto markets may be poised for a December recovery, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin BTC$89,860.54.

In a market note shared Dec. 6, the firm pointed to rising odds of a Federal Reserve rate cut next week, now priced at 93% on Polymarket and 86% on the CME’s FedWatch , as a central driver.

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Liquidity conditions are also improving, based on Coinbase’s internal M2 index, which tracks monetary flows that impact asset prices. The firm had previously predicted a weak November followed by a rebound, citing similar indicators.

The note also flagged additional tailwinds that could support the rally, among them the expected bursting of the so-called AI bubble that hasn’t happened and a weaker U.S. dollar.

Though remaining lower for the week, bitcoin did manage to rise from its worst levels, perhaps fueled by institutional headlines like Vanguard’s crypto ETF policy reversal, Bank of America greenlighting its wealth advisers to recommend allocations of as much as 4% of portfolios in crypto.

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