Coinbase Institutional, the professional investment arm of the U.S.-based cryptocurrency exchange Coinbase, anticipates a market reversal in December following the severe downturn in November. In their Wednesday-released monthly report, they highlight the U.S. Federal Reserve’s re-entry into bond markets as a positive sign for risk assets, marking the end of quantitative tightening.
November Collapse Shakes the Crypto World
According to Coinbase’s analysis, November marked one of the weakest periods for the crypto market in the past three years. Notably, Bitcoin 
$78,774 traded significantly below its 90-day average, by three standard deviations, underperforming stocks such as the S&P 500, which saw only a one standard deviation decline. The company also noted record-high outflows from spot ETFs and a 30-day supply momentum for stablecoins at its lowest since 2023.
Long-term investors shifted from accumulating to selling BTC, and crypto-focused treasury companies began trading below net asset value. Despite these developments, Coinbase believes that while the market remains fearful, the conditions for a recovery in December are ripe.
The report also addressed “K-shaped” economic prospects, where AI-driven job losses could boost corporate profits but undermine individual income stability. Nonetheless, Coinbase noted that the impact of this imbalance on the crypto market remains unclear.
Fed’s Stance and Liquidity Revival
Coinbase posits that the Federal Reserve’s potential rate cuts and liquidity enhancement could drive capital back into the crypto market in December. This optimism suggests that despite a full stabilization potentially taking months, the conditions are forming for a market shift by December.
Former hedge fund manager James Lavish echoed similar sentiments, indicating that Fed policies have devalued the dollar. The U.S. Dollar Index (DXY) has fallen over 10% since the year’s start, with expectations of further decline as the Fed possibly transitions to quantitative easing (QE).
According to St. Louis Fed data, the central bank injected $13.5 billion into the banking system through short-term repo operations. This amount marks the second-largest liquidity increase since the COVID-19 period, signaling a return of monetary abundance to the markets.
