December Forecast: Crypto Market Heating Up

As December unfolds, excitement is rippling across the global crypto market landscape. A fresh wave of liquidity is entering the market, Federal Reserve sentiment is shifting dramatically, and multiple on-chain signals are pointing toward what could become a major year-end recovery. In a detailed research note released today, Coinbase—one of the world’s most influential crypto exchanges—painted an increasingly optimistic picture for digital assets heading into late 2025. This renewed momentum isn’t just about market sentiment. It’s fueled by concrete macroeconomic forces: rising expectations of U.S. interest rate cuts, improvements in global liquidity conditions, and a surprising resilience across altcoins and stablecoins. Analysts who were preparing for a quiet end to the year are now rethinking everything.

Coinbase Highlights a Powerful Liquidity Rebound

Coinbase’s latest research note delivered a surprisingly bullish tone. The firm confirmed that global liquidity indicators jumped sharply at the start of December, marking one of the strongest boosts seen in months. One of the most eye-catching data points is the dramatic shift in expectations for U.S. monetary policy. As of December 4, the market now sees a 92% chance of a Federal Reserve interest rate cut. Such a sudden shift in expectations is a major catalyst for risk-on assets—especially cryptocurrencies. Coinbase’s proprietary global M2 money-supply index showed a steady upward climb heading toward late 2025. A rising M2 figure typically reflects expanding liquidity in the financial system, often coinciding with stronger performance in markets like crypto, equities, and commodities. The firm previously warned that October would be a period of “reset,” and that November could remain weak. Both predictions turned out to be spot-on. But now, the exchange says the environment has finally shifted—and a true recovery phase could be beginning. This is not just blind optimism. The underlying narrative is strengthening:

• Liquidity conditions are improving.
• The Federal Reserve is turning less restrictive.
• And the much-feared “AI bubble” has not burst, meaning the broader tech-driven risk appetite remains intact.

Coinbase’s overarching message is clear: December may become the month crypto investors have been waiting for.

Why Bitcoin Looks Undervalued Heading Into Year-End

In the newest issue of Coinbase Institutional’s Monthly Outlook, analysts highlighted a sweeping turn in U.S. monetary policy. The Federal Reserve has quietly re-entered the bond market, hinting that the era of aggressive quantitative tightening (QT) may be nearing its end. This is a massive deal. Historically, when the Fed eases QT—or signals a pause—it triggers:

• Greater liquidity in financial markets
• Lower downward pressure on asset prices
• Stronger flows into risk assets like Bitcoin

In fact, Coinbase called attention to an astonishing statistical anomaly: Bitcoin fell more than three standard deviations below its 90-day trend in November. That’s an extremely rare deviation that typically suggests oversold conditions. By comparison, U.S. equities remained much closer to their average range, indicating that Bitcoin’s pullback was exaggerated relative to broader markets. Adding to the bullish setup:

• Long-term BTC holders entered a rare distribution phase.
  That means seasoned investors were taking profits, but such events often occur before major recoveries.
• Digital-asset investment products began trading at a discount to net asset value (NAV).
  When NAV discounts appear, they tend to reflect temporary market fear rather than fundamental weakness—another signal that the market may be bottoming.

Not everyone agrees with Coinbase’s optimism, however. Ted Pillows, a well-known macro analyst, warned that the U.S. 10-year Treasury yield is still above 4%, even after rate cuts. He noted the yield was on track for its largest weekly increase since June 2025, arguing that yields staying elevated could pressure risk assets in the short term. Still, the overall picture points toward improving conditions—and Bitcoin may finally be positioned for an overdue rebound.

Altcoin & Stablecoin Data Reveal a Growing Appetite for Risk

Beyond Bitcoin and macroeconomics, new data from Altcoin Vector shows a fascinating divergence forming between stablecoin dominance and altcoin market strength. Historically, this divergence has served as one of the crypto market’s most reliable risk sentiment indicators.

How It Works:

• Risk-Off Phase:
  When fear increases, traders move money into stablecoins like USDT. USDT dominance rises, and altcoins fall.
• Risk-On Phase:
  When confidence returns, money flows out of stablecoins and into altcoins, boosting their dominance and trading volume.

Over the past several weeks, stablecoin dominance started to weaken—but altcoins held their ground. That’s rare. Normally, when stablecoins lose strength, altcoins instantly surge. The fact that altcoins didn’t break down is a strong sign of building resilience. Altcoin Vector suggests this could be the early phase of a rotation back into risk assets. If this pattern continues, altcoins may be preparing for their trademark explosive moves—those rapid multi-week runs where they outperform Bitcoin by huge margins as liquidity redistributes across the market.

Why December Looks Different From Previous Months

What makes the current setup so intriguing is the convergence of multiple powerful forces that rarely align at the same time.

Macro liquidity is improving

The global M2 rebound is impossible to ignore. More money flowing through the system historically accelerates crypto adoption and investment.

Federal Reserve rate cuts are now extremely likely

A 92% probability is nearly a certainty by financial-market standards. Lower rates reduce financing stress and fuel risk-on behavior.

Bitcoin appears deeply undervalued by historical measures

A three-standard-deviation deviation from trend is statistically extreme. These moments often precede sharp reversals.

Long-term holders are distributing

Such phases tend to happen during major macro turning points—not sideways markets.

Stablecoins are weakening while altcoins stay steady

This is a classic precursor to a surge in crypto risk-taking.

Taken individually, each of these signals is important. Combined? They paint a picture of a market that may be gearing up for one of the strongest year-end recoveries in recent memory.

A December Reset That Could Spark a Broader 2025 Crypto Revival

The combination of rising global liquidity, shifting Federal Reserve expectations, strengthening altcoin resilience, and Bitcoin’s oversold setup creates an unusually strong case for a December crypto recovery. Coinbase’s research adds weight to the narrative, suggesting that markets are transitioning from a period of stagnation into one of renewed momentum. While risks remain—such as elevated Treasury yields or sudden macro shocks—the overall structure looks promising. If the upward trends continue, December could be remembered as the month the crypto market finally clawed its way out of the autumn slump and began laying the foundation for a powerful 2025 bull cycle.

Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.