Coinbase Sees a December Bitcoin Bounce — Why Liquidity and Fed Odds Matter for Traders

Why Coinbase thinks Bitcoin could stage a December comeback

Coinbase (COIN) says broad money and easing-rate expectations are setting the stage for a possible Bitcoin lift as the year closes. For traders and institutions, that claim matters because it links a familiar macro story — more cash chasing assets when central banks loosen — with the seasonal timing of year-end flows. Coinbase’s view is not a market call in isolation; it is a reminder that shifts in global liquidity and the expected path of U.S. rates often change how investors allocate to risk assets, and crypto is high on that list.

What Coinbase’s research team actually argued

Coinbase’s research team framed the case in plain terms: when global money supply indicators tick up and investors start to price in Federal Reserve rate cuts, assets tied to risk appetite tend to rally. The analysts pointed to trends in global M2 — a broad measure of money circulating in economies — and the shrinking odds that the Fed will maintain a long stretch of high rates. They argued the timing could line up with December, a month that historically has seen concentrated flows and rebalancing from funds.

The note emphasized two links. First, higher broad money is the fuel for asset-price rallies because it increases the pool of liquidity that can chase returns. Second, reduced expectations for further Fed tightening shift bond yields lower, making yield-less assets such as Bitcoin more attractive in relative terms. Coinbase’s team stopped short of promising a specific price target; their point was about the mix of forces that could make a rally more likely than not in a particular window.

Macro backdrop — why liquidity and Fed math matter for crypto

The macro picture is straightforward: when central banks ease, cash becomes cheaper and investors search for higher returns. For crypto, which has a shorter history but a high sensitivity to risk appetite, those moments can translate into outsized moves. Global M2 trends are a blunt but useful gauge of how much money is available across economies. When M2 growth picks up, there is more capital to deploy into markets.

At the same time, markets trade on Fed expectations. If traders start to price a rate cut in the months ahead, that tends to lower real yields and lifts risk-taking. Historically, periods of easing or even a clear pivot in the Fed’s language have coincided with stronger performance in Bitcoin and other risk assets because it reduces the opportunity cost of holding them.

What traders are watching now: price action, flows and positioning

On the trading desk, the signs are mixed but watchable. Price action has shown short bursts of strength followed by consolidation — the kind of chop that precedes directional moves when macro signals firm up. Volumes have picked up in some sessions, and derivatives markets tell a similar story: futures open interest and funding rates have ebbed and flowed as traders test directional conviction.

Spot ETF flows and institutional inflows are the clearest barometer for some shops. Where steady net buying into spot exposure occurs, it supports sustained rallies because it removes supply from the market. Other market strategists point to funding rates — a persistent positive funding rate often signals crowded long positioning and raises the risk of sharper pullbacks if sentiment reverses.

Powell’s caveat and other risks that could cap any December rally

The biggest brakes are policy surprises and regulatory shocks. Plainly put: if Fed officials, including Chair Jerome Powell, signal that rates will stay higher for longer or that inflation is not yet under control, the expectation-driven rally could evaporate. Regulatory moves in major jurisdictions — new restrictions or enforcement actions — can also trigger rapid outflows and volatile price swings.

Other risks include sudden shifts in liquidity, geopolitical events that send investors to safe havens, or a sharp unwind in leveraged positions. Crypto’s structure amplifies these shocks because leverage and concentrated holdings can turn modest selling into large price moves.

Scenario map and what investors should monitor heading into December

For traders and institutional investors, think in scenarios. In a bull-leaning scenario — where global liquidity grows modestly and the market prices earlier Fed easing — Bitcoin could see a clear, sustained lift as spot demand and ETF flows build. In a neutral scenario, the market grinds higher but remains vulnerable to short squeezes and headline risk. In a negative scenario, hawkish Fed signals or regulatory surprises spark a quick reversal.

Concrete indicators to watch: global M2 and key liquidity proxies, Fed comments and market-implied rate-cut odds, net flows into spot crypto products, futures open interest and funding rates. Risk management matters: consider position sizing, the potential for rapid deleveraging in derivatives, and where stop levels sit relative to your time horizon. Overall, Coinbase’s case is plausible and worth trading around, but it hangs on macro moves that can reverse fast — treat the idea as a conditional trade, not a certainty.

Photo: Engin Akyurt / Pexels

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