Coinbase”s institutional division has suggested that the cryptocurrency market might experience a recovery this December following a notable decline in the previous month. The firm has highlighted several factors contributing to this potential rebound, including enhanced liquidity, especially after the Federal Reserve concluded its quantitative tightening (QT) measures.
In a recent post on X, Coinbase Institutional indicated that the conditions are aligning for the crypto market to see a resurgence this month. Their research team revealed that the likelihood of a Federal Reserve rate cut has surged, with odds reaching new heights. They stated, “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.”
As reported by CoinGape, the current probability of a 25-basis-point rate reduction is approximately 90%, suggesting that the Fed is likely to implement this cut during the upcoming FOMC meeting. This development creates a bullish sentiment for the market, particularly since the Fed”s cessation of QT on December 1 has paved the way for increased liquidity.
Furthermore, Coinbase Institutional pointed out that the so-called “AI bubble” continues to thrive, which they believe provides additional impetus for a market recovery this month. Their research team also noted the appeal of shorting USD at the current levels.
In a prior analysis, Coinbase hinted at a resetting of positions within the crypto market, referring to their customized M2 index that expected weakness in November but anticipates a reversal in December. They declared that this could mark the beginning of renewed market momentum.
Echoing this optimistic outlook, crypto analyst Ash Crypto emphasized that the Russell 2000 index serves as a crucial indicator for the altcoin season and is on the verge of reaching new all-time highs. He pointed out that both the Russell 2000 and the altcoin market cap peaked in November 2021, marking a significant cycle peak followed by a prolonged bear market throughout 2022 and 2023. The Russell is currently retesting its November 2021 highs, a pivotal resistance level.
Ash Crypto further noted that historical trends reveal a correlation between the US alt market (represented by the Russell 2000) and cryptocurrency altcoins. Therefore, if the Russell breaks through its resistance, it is likely that Ethereum and other altcoins will follow suit. He also highlighted the current state of fear in the crypto market, following a recent flash crash, asserting that the flush of leverage creates an ideal environment for a potential parabolic surge.
Market participants are advised to keep a close watch on the Russell as it will serve as a barometer for altcoin movements in the weeks ahead.
