Coinbase Institutional has provided an optimistic outlook for the digital asset market, forecasting a turnaround in December despite the challenges faced in November. The firm noted key indicators suggesting a positive shift.

“With quantitative tightening [QT] ending, the Fed is back in the bond market, and the drain of cash from markets may be behind us,” Coinbase Institutional remarked.
Translation: They believe the cessation of QT will stimulate the crypto market.

The firm’s comprehensive monthly report delves into last month’s lackluster performance for Bitcoin and other cryptocurrencies.

Bitcoin significantly underperformed US equities, experiencing a decline well below its recent average, while the S&P 500 remained comparatively stable.

“While fear remains elevated, we believe conditions favor a reversal in December.”
Translation: They expect market conditions to improve next month.

The downturn in October’s liquidation heavily impacted altcoins, with ETF flows sharply decreasing, leading to the largest cumulative outflows recorded in November.

Concerns were raised regarding a diverse impact on the economy, highlighting that while AI might boost profits, it threatens personal income stability, though its effect on crypto remains inconclusive.

Next Steps and Perspectives

• “Conditions could be primed for a reversal in December, as we believe the Federal Reserve could cut rates and unlock some inflows.”
• The sentiment was echoed by James Lavish, expressing a bearish view on the Fed’s policies, particularly regarding the dollar’s value.
• The US Dollar Index has dropped significantly this year, suggesting potential for further decrease with likely new liquidity boosts.

Coinbase Institutional’s outlook reflects both caution and hope, emphasizing macroeconomic fundamentals that are said to be stronger than before.