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Market Recovery Incoming? Coinbase Predicts December Could Flip Bullish

Coinbase Institutional expects the crypto market to recover in December 2025. Here’s why improved liquidity, Fed policy changes, and macro indicators may trigger a market rebound.

After a turbulent November, the crypto market may finally be setting up for a recovery. According to Coinbase Institutional, multiple tailwinds—including stronger liquidity conditions and a friendlier macro landscape—could help the market bounce back before the end of December.

Coinbase Signals Potential December Upswing

In a recent post on X, Coinbase’s institutional research team highlighted that the crypto market appears “positioned for a December recovery” as liquidity conditions improve across financial markets.

Their analysis points to a sharp rise in expectations for a Federal Reserve rate cut, with the odds of a 25 bps reduction sitting near 90% ahead of next week’s FOMC meeting. If the rate cut goes through, it would mark a clear shift toward looser monetary policy—historically a bullish scenario for crypto assets.

Adding more momentum to this outlook, the Fed officially ended quantitative tightening (QT) on December 1, a move that often increases market liquidity and risk appetite.

Coinbase Institutional also noted that the widely discussed “AI bubble” has not burst and may still have room for further expansion—a trend that often spills over into crypto markets as capital rotates within high-growth speculative sectors. The firm added that short-USD trades remain appealing, given the current macro setup.

Referencing Prior Research: Reset Before the Reversal

Coinbase’s latest commentary builds on earlier research suggesting that the crypto market was due for a positioning reset, citing findings from their custom M2 liquidity index.

Their models had anticipated November weakness, followed by the potential for a December reversal—a pattern that now appears to be unfolding. According to the exchange, the present environment might represent “the starting line for market momentum to reassert itself.”

Additional Bullish Indicator: Russell 2000 Approaching Breakout

Crypto analyst Ash Crypto has also echoed a bullish stance. In a post on X, he emphasized that the Russell 2000 index—often used as a proxy for U.S. alternative and speculative markets—is nearing a new all-time high.

He pointed out a striking correlation:

  • Both the Russell 2000 and the altcoin market cap topped out in November 2021, marking the peak of the previous cycle.
  • Both then entered a prolonged bear market through 2022–2023.

Now, the Russell is retesting its November 2021 highs, a critical resistance level. Ash Crypto believes that a breakout above this zone could confirm the beginning of a major bull run into 2026.

He also noted that historically, U.S. small-cap momentum (Russell 2000) and crypto altcoins often move in sync. Should the Russell break out decisively, the analyst expects Ethereum and altcoins to follow with strong upside movement.

A Market Washed Out and Ready to Move?

The analyst further highlighted that the market remains in a state of fear following the 10/10 flash crash, with leverage wiped out across major exchanges. He described the current setup as “a perfect scenario for a parabolic pump”, noting that clean leverage conditions often precede strong upward trends.

His final warning:
Market participants should monitor the Russell 2000 closely—a breakout would offer a major clue for how altcoins may behave over the coming weeks.

Final Outlook

Between improving liquidity, a potential Fed rate cut, the end of QT, and strong signals from correlated traditional-market indices, December may shape up to be one of the most critical months for crypto in 2025.

Whether momentum truly returns will depend on confirmation from both macro indicators and market behavior—but analysts agree: the stage for a rebound is now set.

LUMECHAiN
LUMECHAiN
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