Crypto Eyes December Rebound as Liquidity Rises and Fed Cut Odds Hit 92%
Coinbase says crypto may enter a December recovery as liquidity rises, macro conditions turn supportive, and Fed rate-cut odds surge to 92%.
Quick overview
- Coinbase's latest outlook suggests that crypto markets may be entering a recovery phase due to improving liquidity and shifting macro expectations.
- Traders currently assign a 92% probability that the Federal Reserve will cut rates, which historically leads to increased capital flow into Bitcoin and other high-beta assets.
- Coinbase notes that rising global M2 liquidity and positive trends in AI-related equities indicate a broader shift toward risk-on conditions.
- The firm believes that December could mark an inflection point for crypto markets, with the potential for renewed strength if liquidity continues to improve.
Crypto markets may be entering a new recovery phase, according to Coinbase’s latest outlook. The firm argues that a combination of improving liquidity, shifting macro expectations, and the sharp rise in Federal Reserve rate-cut probability is beginning to create a more constructive backdrop for digital assets.
As of December 4, traders assign a 92% probability that the Fed will cut rates — a dramatic jump from earlier in the quarter. Historically, such shifts have funneled capital back into Bitcoin and other high-beta assets.
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
Coinbase notes that this setup closely mirrors conditions it outlined in October, when it predicted a soft November followed by a potential reversal into December.
Liquidity Trends Turn Higher
One of Coinbase’s most-watched indicators, a global M2 liquidity gauge, has begun to rise again after a mid-year slowdown. Liquidity expansions have long aligned with stronger crypto performance, particularly for Bitcoin, which tends to benefit when global capital flows loosen.
Other dynamics reinforcing the risk cycle:
- AI-related equities continue to outperform despite earlier fears of a bubble
- Systematic macro traders have re-engaged as liquidity improves
- Short-USD positioning is driving inflows into non-dollar assets
Together, these trends suggest a broader shift toward risk-on conditions rather than isolated market noise.
Why December Could Mark an Inflection Point
Coinbase views the latest pullback not as a breakdown, but as a positioning reset that historically precedes renewed strength. With liquidity firming, macro expectations turning supportive, and price stabilization across major assets, the firm argues that the building blocks for a rebound are now in place.
A sustained improvement through December could set the tone for early 2026. Much depends on whether global liquidity continues to expand and whether rate expectations hold steady into the first quarter.
For now, Coinbase’s message is straightforward: the conditions driving past crypto recoveries are re-emerging, and markets may be closer to a turning point than sentiment suggests.
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