Coinbase Institutional stated on December 5 that the crypto market may enter a recovery phase this month. The firm’s research team pointed to improving liquidity conditions and growing expectations for a Federal Reserve interest rate cut.
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
The institutional arm of Coinbase shared its analysis on social media platform X. They noted that the odds of a Fed rate cut have jumped to 92% as of December 4.
The Federal Reserve ended its quantitative tightening program on December 1. This policy shift removes pressure from financial markets by stopping the reduction of the Fed’s balance sheet.
Coinbase’s research team developed a custom global M2 money supply index to track liquidity conditions. This index predicted November weakness in crypto markets followed by a December reversal.
The firm stated that current conditions could mark “the starting line for crypto market momentum to reassert itself.” They shared a chart showing their M2 supply gauge alongside bitcoin prices and the COIN50 Index.
The Coinbase analysis highlighted rising liquidity trends through late 2025. Their custom index shows systemic liquidity turning more supportive for digital assets.
Market analysts often track global M2 shifts to understand liquidity cycles. Crypto markets typically respond to changes in capital availability across the financial system.
UPDATE: ACCORDING TO CME DATA, THE CHANCES of A RATE CUT IN DECEMBER HAVE NOW REACHED 88.4%.
ONLY 3 DAYS REMAIN UNTIL THE FOMC MEETING.
DIRECT IMPLICATION: Markets are considering it almost confirmed that the Fed will cut rates, and this could impact both stocks and crypto. pic.twitter.com/A9EVCiyxj6
— Crypto Aman (@cryptoamanclub) December 8, 2025
The odds of a 25-basis-point rate cut currently stand around 90% for the Fed’s upcoming FOMC meeting next week. This monetary easing could attract capital that has been sitting on the sidelines.
Coinbase Institutional also noted that the “AI bubble” hasn’t burst yet. The research team said this sector still has room to grow, which provides another positive factor for crypto markets.
The firm stated that short USD trades look attractive at current price levels. A weaker dollar typically benefits risk assets including cryptocurrencies.
Crypto analyst Ash Crypto provided additional perspective on market conditions. He identified the Russell 2000 index as a key indicator for altcoin season.
Russell 2000 is the biggest indicator for Altseason, and it’s about to hit a new all-time high.
Same Cycle, Same Breakout Point
– Both Russell 2000 and ALTS MCAP peaked in Nov 2021, marking the cycle top.
– Both entered a long bear market (2022–2023).
– Now, Russell is… pic.twitter.com/deJeXVnj2v— Ash Crypto (@AshCrypto) December 6, 2025
The Russell 2000 is approaching its November 2021 all-time highs. Both the Russell 2000 and altcoin market capitalization peaked during that period before entering a bear market.
Ash Crypto stated that the Russell 2000 is retesting its November 2021 highs at a key resistance zone. A breakout above these levels would confirm the start of a bull run, he said.
The analyst noted that the Russell 2000 and crypto altcoins often move in sync. If the Russell breaks out, ethereum and other altcoins are expected to follow.
The crypto market recently experienced a flash crash event on October 10. This event flushed out leveraged positions from the market.
Ash Crypto stated that all leverage has been cleared from the system. He described this as a perfect setup for a potential upward move in prices.
Market participants are watching the Russell 2000 closely for signals about altcoin direction. The index’s performance in coming weeks could indicate how digital assets will move.
Coinbase’s M2 index shows bitcoin’s price movements alongside their liquidity gauge. The visual data reinforces the view that systemic liquidity conditions are improving for crypto assets.
The post Coinbase Predicts December Crypto Rally as Fed Rate Cut Odds Reach 92% appeared first on CoinCentral.
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