Coinbase expects the crypto market to enter a bullish phase in December as liquidity improves and selling pressure from long-term Bitcoin holders eases.
On December 5, the US-based crypto trading platform stated that market conditions have changed in recent weeks, citing new capital inflows, tighter spreads, and stronger macro support.
Liquidity conditions are improving as the odds for Fed cuts rise.
The exchange highlighted an increase in expectations for a rate cut from the Federal Reserve, with CME FedWatch showing odds nearing 90% for the meeting on December 10.
It added that the rise in liquidity marks a sharp turnaround from the persistent outflows that characterized October and November.
In fact, broader money supply data seems to support this thesis. Federal Reserve figures show that M2 has increased to a record high of 22.3 trillion dollars, surpassing the peak early in 2022 after a rare multi-year decline.
Analysts often track M2 to understand changes in liquidity and inflation expectations. Furthermore, increased liquidity has historically been associated with stronger Bitcoin performance, given the asset's fixed supply of 21 million coins.
At the same time, Coinbase stated that short-dollar positions appear attractive at current levels, which could draw more risk-seeking investors back to crypto.
The firm also claimed that the so-called AI trading continues to gain momentum and is drawing funds toward digital asset sectors related to automation and demand for computing power.
Long-term Bitcoin holders are pulling back from selling.
Notably, blockchain indicators point in the same direction.
Darkfost, an on-chain researcher at CryptoQuant, said that spending from Bitcoin wallets older than five years has drastically fallen after months of increased activity from this group.
He noted that the average daily sales from these long-term holders have fallen to about 1000 BTC from around 2350 BTC on a 90-day moving basis. This indicator often signals pressure from investors who have accumulated coins at lower historical price levels, including around $30,000.
Darkfost added that the decline in UTXO and activity with spent outputs indicates that pressure is easing as the market cycle develops. Thus, reduced selling from OG holders gives Bitcoin more room to consolidate after a volatile autumn.
"These data suggest that selling pressure from OGs is easing, giving the market a bit more breathing room. It is worth noting that their selling pressure seems to be diminishing as the cycle progresses, with STXO peaks (90-day moving averages) from these OGs getting lower and lower," the analyst explained.
Overall, with improved liquidity, supportive macro indicators, and reduced supply pressure, the groundwork is laid for a stronger December. If the momentum holds, Bitcoin could record its first positive close for December since 2023.
