Crypto Outlook Cautiously Optimistic Amid Liquidity Concerns and Regulatory Shifts

According to Coinbase Institutional's Q4 2025 "Charting Crypto: Navigating Uncertainty" report, the crypto market's year-end setup still skews positive, though the firm maintains a cautious stance. The report was produced in collaboration with Glassnode.

Coinbase links the recent October 10th market slide to heavy leverage meeting thin order books, which worsened when some exchanges' auto-deleveraging capped market-maker shorts and drained liquidity. The firm warns that liquidity and macro conditions could tighten later in Q4, with the potential for a November liquidity fade.

However, the report also highlights several supportive factors. Coinbase's Global M2 Money Supply Index, which has historically tracked Bitcoin and tends to lead by around 110 days, began the quarter in a favorable position. The firm also anticipates two additional Federal Reserve rate cuts before year-end, which it believes could prompt some cash to move from money-market funds back toward risk assets.

Coinbase sees stablecoin supply and monthly volumes at or near record levels as evidence that more payments and transfers are moving on-chain. The firm also notes that U.S. spot ETF infrastructure for Bitcoin and Ether continues to deepen, improving access for traditional allocators and strengthening market depth.

In terms of positioning, Coinbase favors Bitcoin, citing its "digital gold" role amid persistent doubts about fiscal and monetary discipline. The report also says Ether looks constructive, with scaling progress pushing more activity to layer-2 networks and fees falling, while sentiment has improved since earlier in the year.

The report does acknowledge open questions around the long-term business models of digital-asset treasury companies, which Coinbase describes as meaningful, relatively steady buyers of Bitcoin and Ether and an important source of demand.