Coinbase Institutional Sees December Reversal Despite Bitcoin’s Brutal November

Coinbase Institutional has painted a brighter picture for the digital asset markets going forward than we’ve seen in recent weeks.

“With quantitative tightening [QT] Ultimately, the Fed is back in the bond market, and the flow of money out of the markets may be behind us,” Coinbase Institutional said on Wednesday before adding: “That’s usually good for risky assets like crypto.”

The findings came in the company’s monthly outlook report, which took a deep dive into why the Bitcoin and crypto markets performed so poorly last month.

Bitcoin has severely underperformed U.S. stocks on a risk-adjusted basis, falling more than three standard deviations below its 90-day average, while the S&P 500 fell just one standard deviation, the report said.

“While fears remain high, we believe conditions favor a turnaround in December.”

Buy the dip?

Now that quantitative tightening has ended, the Fed is back in the bond market and the drain of money from the markets can be over. That’s usually good for risky assets like crypto.

So why did BTC dump?

• BTC broke the major support bands in the bull market
• Options traders… pic.twitter.com/1C8mxtemun

— Coinbase Institutional 🛡️ (@CoinbaseInsto) December 2, 2025

Breaking the breakdown

There were several key challenges as the market digested the October liquidation, which hit altcoins particularly hard, the company noted. Spot ETF outflows have turned markedly negative, posting record cumulative outflows in November, while stablecoin supply contracted with the weakest 30-day momentum since 2023.

Long-term holders distributed coins instead of accumulating them, and treasury digital asset instruments are trading below net asset value for the first time since 2024.

The report also discussed concerns about a “K-shaped” economic recovery, where AI-powered job displacement could boost corporate profits while eroding the stability of personal income, although evidence of this impacting cryptocurrencies remains weak.

You might also like:

“We believe that sidelined cash (e.g., significant money market balances) could still turn into regulated BTC vehicles when conditions stabilize.”

It all paints a bleak picture, but the macroeconomic fundamentals remain stronger than ever. Coinbase reiterated the same sentiment from October, stating that “full market stabilization will likely take a few months.”

However, it said that “conditions could be ready for a reversal in December as we believe the Federal Reserve could cut rates and free up some inflows.”

Bearish on the Fed

Reformed hedge fund manager James Lavish echoed the sentiment, stating that he was “bearish on the Fed and what they continue to do to the value of the dollar.”

The US Dollar Index (DXY), which values ​​the dollar against a basket of currencies, has tumbled more than 10% since the start of this year. It will likely decline further as the Fed begins quantitative easing (QE) and injects liquidity.

Over the past 16 years, the Fed added a total of $8.8 trillion in liquidity to the markets and removed a total of only $3.2 trillion before calling *uncle* for the second time. So when people ask why I’m so bullish on Bitcoin, it’s simple. I’m bearish on the Fed and what they… pic.twitter.com/Z9cY2J6JDE

— James Lavish (@jameslavish) December 2, 2025

It appears to be already happening, as the Fed just injected $13.5 billion into the banking system through overnight repos, the second-largest spike since the COVID-19 pandemic. according to on data from the St. Louis Fed.