Coinbase Forecasts December Crypto Surge as Fed Rate Cut Probability Hits 92%

Wall Street's favorite crystal ball—the Fed futures market—is flashing a 92% signal for rate cuts. Coinbase analysts say that's the green light crypto's been waiting for.

The Macro Trigger

It's not about blockchain upgrades or ETF flows this time. The entire narrative hinges on one thing: cheaper money. When the Federal Reserve eases, risk assets breathe. Historical patterns show liquidity finds its way to the most volatile corners of the market first. Guess which asset class fits that bill?

December's Perfect Storm

Timing is everything. A pre-holiday policy shift combines with year-end portfolio rebalancing. Institutional money, sitting on sidelines, gets a new mandate: seek yield. Crypto, with its 24/7 trading, becomes the obvious outlet. The 'Santa Rally' might just wear a digital beard this year.

The Cynical Take

Let's be real—traders love a simple story. 'Fed cuts, crypto pumps' is a headline that bypasses brain cells and goes straight to the buy button. It neatly ignores pesky details like regulation, leverage, and the fact that the last time rates were this high, Bitcoin was a fringe experiment. But who needs nuance when you've got a 92% probability?

The bottom line? The market's betting the house on a policy pivot. If the Fed delivers, December could get very interesting. If not, well, there's always the '2026 narrative' to fall back on.

TLDR

• Coinbase Institutional predicts crypto market recovery in December as liquidity improves and Fed rate cut odds reach 92%
• Federal Reserve ended quantitative tightening on December 1, creating bullish outlook for digital assets
• Coinbase’s custom M2 money supply index anticipated November weakness and December reversal
• Russell 2000 approaching November 2021 highs, which crypto expert Ash Crypto says signals potential altcoin bull run
• Short USD trades considered attractive at current levels as macro conditions turn favorable

Coinbase Institutional stated on December 5 that the crypto market may enter a recovery phase this month. The firm’s research team pointed to improving liquidity conditions and growing expectations for a Federal Reserve interest rate cut.

It’s beginning to look a lot like a recovery.

We think crypto could be poised for a December recovery as liquidity improves, Fed cut odds jump to 92% (as of Dec 4), and macro tailwinds build.

Here’s why:
• Liquidity is recovering
• The supposed “AI bubble” hasn’t burst… pic.twitter.com/CpbfijdKWQ

— Coinbase Institutional(@CoinbaseInsto) December 5, 2025

The institutional arm of Coinbase shared its analysis on social media platform X. They noted that the odds of a Fed rate cut have jumped to 92% as of December 4.

The Federal Reserve ended its quantitative tightening program on December 1. This policy shift removes pressure from financial markets by stopping the reduction of the Fed’s balance sheet.

Coinbase’s research team developed a custom global M2 money supply index to track liquidity conditions. This index predicted November weakness in crypto markets followed by a December reversal.

The firm stated that current conditions could mark “the starting line for crypto market momentum to reassert itself.” They shared a chart showing their M2 supply gauge alongside Bitcoin prices and the COIN50 Index.

Liquidity Trends Support Recovery Outlook

The Coinbase analysis highlighted rising liquidity trends through late 2025. Their custom index shows systemic liquidity turning more supportive for digital assets.

Market analysts often track global M2 shifts to understand liquidity cycles. Crypto markets typically respond to changes in capital availability across the financial system.

UPDATE: ACCORDING TO CME DATA, THE CHANCES of A RATE CUT IN DECEMBER HAVE NOW REACHED 88.4%.

ONLY 3 DAYS REMAIN UNTIL THE FOMC MEETING.

DIRECT IMPLICATION: Markets are considering it almost confirmed that the Fed will cut rates, and this could impact both stocks and crypto. pic.twitter.com/A9EVCiyxj6

— Crypto Aman (@cryptoamanclub) December 8, 2025

The odds of a 25-basis-point rate cut currently stand around 90% for the Fed’s upcoming FOMC meeting next week. This monetary easing could attract capital that has been sitting on the sidelines.

Coinbase Institutional also noted that the “AI bubble” hasn’t burst yet. The research team said this sector still has room to grow, which provides another positive factor for crypto markets.

Russell 2000 Signals Potential Altcoin Movement

The firm stated that short USD trades look attractive at current price levels. A weaker dollar typically benefits risk assets including cryptocurrencies.

Crypto analyst Ash Crypto provided additional perspective on market conditions. He identified the Russell 2000 index as a key indicator for altcoin season.

Russell 2000 is the biggest indicator for Altseason, and it’s about to hit a new all-time high.

Same Cycle, Same Breakout Point

– Both Russell 2000 and ALTS MCAP peaked in Nov 2021, marking the cycle top.
– Both entered a long bear market (2022–2023).
– Now, Russell is… pic.twitter.com/deJeXVnj2v

— Ash Crypto (@AshCrypto) December 6, 2025

The Russell 2000 is approaching its November 2021 all-time highs. Both the Russell 2000 and altcoin market capitalization peaked during that period before entering a bear market.

Ash Crypto stated that the Russell 2000 is retesting its November 2021 highs at a key resistance zone. A breakout above these levels WOULD confirm the start of a bull run, he said.

The analyst noted that the Russell 2000 and crypto altcoins often move in sync. If the Russell breaks out, ethereum and other altcoins are expected to follow.

Market Conditions After Recent Volatility

The crypto market recently experienced a flash crash event on October 10. This event flushed out Leveraged positions from the market.

Ash Crypto stated that all leverage has been cleared from the system. He described this as a perfect setup for a potential upward MOVE in prices.

Market participants are watching the Russell 2000 closely for signals about altcoin direction. The index’s performance in coming weeks could indicate how digital assets will move.

Coinbase’s M2 index shows bitcoin’s price movements alongside their liquidity gauge. The visual data reinforces the view that systemic liquidity conditions are improving for crypto assets.