Coinbase Institutional says this sets the stage for a possible recovery of crypto in December, and it looks stronger than many had expected just a few weeks ago.
Two major drivers are highlighted in their latest market note:
1️⃣ Improving macro conditions
Markets are now pricing in a 93% chance of a Federal Reserve rate cut next week, according to Polymarket, and 86% on CME FedWatch.
Lower rates = easier liquidity = a friendlier environment for risk assets, such as bitcoin.
The internal M2 liquidity index at Coinbase is also ticking higher, echoing what their team projected earlier: a weak November followed by a rebound.
2️⃣ Amplifying institutional tailwinds
A host of recent developments has quietly shifted sentiment:
Vanguard changed its crypto ETF policy.
Bank of America OKs crypto allocations of up to 4% for wealth clients.
The U.S. dollar has weakened.
The expected "AI bubble burst" never came, which removes one of the major liquidity risks.
Still down on the week, bitcoin has nonetheless climbed off its recent lows — no doubt buoyed by these institutional signals building beneath the surface.
If liquidity continues to improve, and rate expectations hold, December may mark the first real reacceleration of momentum since the mid-cycle slowdown.
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