Coinbase Institutional shared its monthly outlook on Wednesday, saying that the market may be setting up for a rebound in December after Bitcoin had a weak month in November.
Here’s the quick rundown:
- Bitcoin underperformed in November, falling more than three standard deviations below its 90-day average.
- U.S. stocks dropped too, but much less.
- Coinbase says December could bring a turnaround, especially if the Federal Reserve cuts interest rates.
- Former hedge-fund manager James Lavish says he’s bullish on Bitcoin because he’s “bearish on the Fed and what they’re doing to the dollar.”
Bitcoin’s rough November
According to the report, Bitcoin didn’t just dip — it had one of its sharpest underperformances compared to its normal short-term trend. Meanwhile, the S&P 500 fell only about one standard deviation, meaning stocks held up much better.
Coinbase pointed out a few reasons behind the weakness:
- Spot Bitcoin ETFs saw record outflows in November.
- Stablecoin supply shrank, showing slower activity.
- Long-term Bitcoin holders were selling instead of accumulating.
- Crypto treasury products even traded below their net asset values — the first time that happened in 2024.
Why December could look different
The report highlighted one major shift: the Federal Reserve is moving back into the bond market as quantitative tightening winds down. Coinbase says this could mean the end of the cash drain that’s been pressuring risk assets like cryptocurrencies.
They also pointed to the massive amount of money sitting in money-market funds. If the Fed cuts rates and the market stabilizes, some of that cash could move into regulated Bitcoin investment products. But they also cautioned that full stabilization may take a few more months.
Concerns about a “K-shaped” economy
The report briefly touched on fears that AI could push corporate profits higher while hurting job stability for regular workers. Coinbase said there isn’t strong evidence yet that this trend is meaningfully affecting crypto markets.
What’s driving the bullish sentiment?
James Lavish shared his perspective on X. He said that over the last 16 years, the Federal Reserve added about $8.8 trillion in market liquidity but only removed around $3.2 trillion — and still had to step back twice.
His takeaway:
“When people ask why I’m so bullish on Bitcoin, it’s simple. I’m bearish on the Fed and what they’re doing to the value of the dollar. Bitcoin captures this.”
Recent data from the Federal Reserve Bank of St. Louis also showed a large spike in liquidity from overnight repo operations — the second-largest since the pandemic — which adds further fuel to the conversation.
