The cryptocurrency market is showing signs of a potential recovery, according to Coinbase Institutional, driven by improved liquidity and a strong possibility of a Federal Reserve rate cut.
Reasons For Optimism
The potential rebound is attributed to improving liquidity conditions and a significant increase in the likelihood of a Federal Reserve rate cut, which was at 86.2%, according to the CME FedWatch tool, as of Sunday.
Bitcoin (CRYPTO: BTC) was down 0.5% over the last 24 hours, hovering around $89,200 at the time of writing. Ethereum (CRYPTO: ETH) was down 0.03%, hovering around $3,030.
In a post on social media platform X, Coinbase Institutional highlights several factors contributing to this optimistic outlook.
Liquidity in the market is showing signs of recovery, which could provide the necessary support for a market upturn, the firm said. Additionally, the anticipated “AI bubble” has not yet burst, suggesting there is still potential for growth in this sector.
Moreover, short trades on the U.S. dollar are currently seen as attractive, adding another layer of positivity to the market sentiment, the firm noted.
Renewed Momentum On Cards
In October, Coinbase Institutional had hinted at a potential shift in market positioning, using their custom M2 index to predict November’s weakness and a possible reversal in December.
This analysis suggests that the crypto market might be at the starting line for renewed momentum, as macroeconomic tailwinds continue to build, potentially setting the stage for a significant recovery.
Bitcoin's Market Structure
The potential recovery in the cryptocurrency market comes at a time when Bitcoin’s market structure is echoing early 2022, marked by weakening demand and rising on-chain stress. Despite this, Max Keiser has advised investors to focus on Bitcoin’s long-term upward trajectory, likening it to an eel where the head remains steady while the tail oscillates.
Alice Liu, Head of Research at CoinMarketCap, suggests that the next true expansion cycle for Bitcoin may not arrive until 2026, as the market is currently in a phase of high fear and volatility.
However, Bitcoin maximalist Max Keiser advised his followers to overlook volatile dips in the cryptocurrency and concentrate on its long-term upward trajectory.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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