Crypto Rebound Signals Emerge as Global Liquidity Improves and M2 Index Turns Positive

Source: ETHNews Original Title: Coinbase Signals a Crypto Rebound as Liquidity Turns and M2 Shows Fresh Upside Momentum Original Link: https://www.ethnews.com/coinbase-signals-a-crypto-rebound-as-liquidity-turns-and-m2-shows-fresh-upside-momentum/ Crypto markets may be entering a recovery phase, according to new institutional insights.

The analysis suggests December could mark a turning point as liquidity improves, rate-cut expectations surge, and macro conditions begin to tilt in favor of risk assets again.

Key Alignment Factors

Three elements are now aligning to create a setup for a broader market reset:

• A rebound in global liquidity
• Renewed appetite for AI-linked equities that has not yet cooled
• Growing attractiveness in short-USD positioning

This shift has been building since October, with teams first flagging weakening momentum heading into November followed by a potential reversal in December. That forecast appears to be playing out, with sentiment now stabilizing and early signs of renewed demand showing across several risk-asset classes.

Liquidity Returns as Fed Expectations Shift Sharply

One of the strongest signals comes from monetary expectations: the probability of a Federal Reserve rate cut has jumped to 92% as of December 4. Lower rates typically support higher-beta assets, especially crypto, as liquidity expands and borrowing conditions loosen.

The analysis notes that the so-called “AI bubble” still shows no meaningful signs of exhaustion, which is indirectly supportive of crypto since both sectors benefit from similar liquidity conditions. Meanwhile, short-dollar trades are becoming increasingly favorable, adding another macro tailwind for digital assets.

A Repricing That Could Mark the Start of New Momentum

The current environment is framed as the potential “starting line” for crypto momentum to reassert itself after weeks of consolidation. If liquidity follows the path implied by custom M2 indices, the market may be positioned for a broader recovery phase as Q4 progresses into early 2026.

The messaging emphasizes a clear shift from caution to cautious optimism: macro headwinds that dominated earlier in Q4 appear to be easing, opening the door for crypto markets to regain strength.

Chart Breakdown: Global M2 Index Signals a Turn

The analysis includes three primary data indicators:

• BTC Price (grey)
• Index of major crypto assets (light grey)
• Custom M2 Supply Index (blue)

The blue M2 curve is the key indicator. Here’s what it reveals:

• After a softening period through mid-2025, the index bottomed out in late summer
• Since then, it has turned sharply upward, approaching 15.2T on the right axis, its highest level heading into 2026
• Historically, BTC has reacted strongly to expansions in global liquidity. The chart visually shows past correlations where upward M2 movements preceded Bitcoin price recoveries

Meanwhile, the BTC price line shows a clear decline from its mid-2025 peaks, followed by a stabilization pattern that aligns with the rebound in the M2 curve. This is exactly the type of liquidity setup being referenced—a macro turn that may allow BTC to catch up to improving monetary conditions.

In short, the analysis reinforces the thesis: global liquidity appears to be re-accelerating, and Bitcoin has historically responded with delayed but strong upward cycles when this happens.