Key notes
- Coinbase views December as the start of a crypto recovery.
- The exchange pointed out that liquidity is improving as the Fed’s chances of cutting rise to 92%.
- According to analysts, Bitcoin could be undervalued after the November crash.
Leading cryptocurrency exchange Coinbase released a research report earlier today, highlighting that December opened with a major increase in global liquidity. The firm said the odds of a Federal Reserve rate cut rose to 92% by Dec. 4, a development that could support a rebound in risk assets.
Its customized global M2 money supply index showed a clear recovery trend through the end of 2025, which builds on the expectation that a weaker dollar environment would support broader market dynamics.
Coinbase has already mentioned a likely positioning reset in October, with November being a weak month. However, the stock market maintains that a reversal will occur in December.
This is starting to look a lot like a recovery.
We believe crypto could be poised for a recovery in December as liquidity improves, the Fed cuts odds to 92% (as of Dec. 4), and macroeconomic winds strengthen.
Here’s why:
• Liquidity is restored
• The so-called “AI bubble” has not burst… pic.twitter.com/CpbfijdKWQ– Coinbase Institutional 🛡️ (@CoinbaseInsto) December 5, 2025
Federal Reserve Policy and Bitcoin Undervaluation
Coinbase Institutional’s latest monthly outlook discusses the role of monetary policy as the Federal Reserve returns to the bond market. The final phase of quantitative tightening could be near.
This change often reduces pressure on liquidity, which supports assets such as Bitcoin. The report said Bitcoin fell more than three standard deviations below its 90-day trend in November, while U.S. stocks held much closer to their norm.
Long-term holders also experienced a rare coin distribution period and digital asset products traded below NAV for the first time this year. These factors point to a recovery in December.
On the other hand, according to analyst Ted Pillows, the US 10-year bond yield is expected to see its biggest weekly rise since June 2025. “Despite the Fed’s rate cut, the 10-year bond yield is above 4%,” he added, saying this is “not a good sign for risky assets.”
Source: Ted Pillows
Changes in Altcoin and Stablecoin Signals
Data shared by Altcoin Vector affirms a divergence between stablecoin dominance and relative altcoin performance. Periods when USDT dominance peaked often occurred just before capital flowed back into higher risk assets.
The divergence between the dominance of Stablecoins and Alts is a clear signal of risk aversion:
🔹 Risk-free: USDT dominance rises while alts fall, classic capital preservation.
🔹 Risk: Alt dominance rises while USDT falls, liquidity shifts towards risk.Every time, stablecoin… pic.twitter.com/UjmTs2qXjV
– Altcoin Vector (@altcoinvector) December 4, 2025
Over the past few weeks, stablecoin strength has shown signs of fatigue while altcoins have remained firm, an early hint that participants may return to the market once Bitcoin stabilizes.
If this rotation continues, altcoins could follow a familiar pattern of rapid acceleration as liquidity shifts toward risk.
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Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article is intended to provide accurate and current information, but should not be considered financial or investment advice. Because market conditions can change quickly, we encourage you to verify the information for yourself and consult a professional before making any decisions based on this content.
A crypto journalist with over 5 years of industry experience, Parth has worked with leading media outlets in the crypto and finance world, gaining experience and expertise in the field after surviving both bear and bull markets over the years. Parth is also the author of 4 self-published books.
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