December Crypto Recovery: Liquidity Improvements and Market Signals

Source: CryptoNewsNet Original Title: Crypto Recovery in December: Coinbase Original Link:

Market Liquidity Recovery Signals

A leading crypto exchange released a research report noting that December opened with a major lift in global liquidity. The firm noted that odds for a Federal Reserve rate cut rose to 92% by December 4, a development that could provide backing to a bounce in risk assets.

Their custom global M2 money supply index showed a clear recovery trend into late 2025, which is building on the expectation that a softer dollar environment would aid broader market momentum.

The exchange previously highlighted October’s positioning reset and November’s weakness, but maintains that a reversal is coming in December.

Federal Reserve Policy and Bitcoin’s Undervaluation

Institutional research from the exchange discussed the role of monetary policy as the Federal Reserve returned to the bond market. The final stretch of quantitative tightening may be near.

That shift often reduces liquidity pressure, which supports assets such as Bitcoin. The report stated that Bitcoin fell more than three standard deviations below its 90-day trend in November, while US equities held much closer to their norm.

Long-term holders also showed a rare period of coin distribution, and digital asset products traded below net asset value for the first time this year. These factors point to a recovery in December.

However, according to analyst perspectives, the US 10-year bond yield is set for significant weekly gains. Despite Fed rate cuts, 10-year bond yield remains above 4%, which some analysts claim is “not a good sign for risk-on assets.”

Shifts in Altcoin and Stablecoin Signals

Data analysis reveals a divergence between stablecoin dominance and altcoin relative performance. Periods when USDT dominance peaked often came just before capital rotated back toward higher-risk assets.

The divergence between stablecoins dominance and alts is a clear risk-on/risk-off signal:

• Risk-off: USDT dominance rises while alts fall, classic capital-preservation.
• Risk-on: alt dominance rises while USDT drops, liquidity shifts toward risk.

In recent weeks, stablecoin strength showed signs of fatigue while altcoins held firm, an early clue that participants may shift back into the market once Bitcoin stabilizes.

If that rotation continues, altcoins may follow a familiar pattern of fast acceleration as liquidity turns toward risk.