Analyzing Bitcoin's Macro Landscape for 2026: Key Insights from an Analyst

In a recent analysis, macro trader plur daddy (@plur_daddy) describes that the conditions for Bitcoin in 2026 will largely depend on the normalization of US liquidity rather than specific triggers within the cryptocurrency market. He observes that the past few months have seen unusually tight conditions that are impacting risk assets.

Key Takeaways

Bitcoin's future in 2026 hinges more on US liquidity conditions than on specific cryptocurrency events.
The Federal Reserve's reserve management purchases are set to relieve financial pressures.
A slight increase in the fiscal deficit is expected, starting January 1, potentially easing market conditions.
Market dynamics are influenced by disinflation trends and the potential for more Fed rate cuts.
Political factors, particularly the Fed chair's selection, could significantly impact market sentiment.

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His main assertion revolves around the strained "plumbing" of the repo market caused by a shortage of bank reserves. As leverage in the economy expanded at a faster rate than the Federal Reserve's balance sheet, this stress has created volatility in the broader markets, leading to erratic movements in equities and an unfavorable environment for cryptocurrencies. Looking ahead to the new year, he anticipates some incremental changes that could ease current tight conditions towards a more neutral stance, even if these do not bring about a "looser" environment.

Key Macro Themes Impacting Bitcoin

1. Federal Reserve's Reserve Management Purchases

The first crucial factor is the Federal Reserve's reserve management purchases (RMPs). “Since the December FOMC meeting, where they announced $40 billion per month in RMPs for three months (followed by an undefined lower amount), this liquidity is gradually flowing in,” he notes. “The Fed has already acquired $38 billion of the first month’s allocation.” While the full impact hasn’t been felt yet, due to year-end liquidity adjustments, he expects this to change soon.

It's important to point out that this program aims to alleviate funding pressures in the financial system rather than driving a risk-on rally. “Let me be clear, this isn't quantitative easing; it's a focused tool to free up clogged financial channels, so temper expectations about its influence,” he stresses. “While it can help ease a tight environment, it won’t turn a normal environment into a loose one.”

In terms of scale, he admits it's an imprecise metric but significant: “Estimating the deficit is more of an art, but I believe it’s about $100-200 billion (which aligns with the planned RMP size). One month of RMPs won't fully resolve the deficit but should still have a substantial effect.”

2. Increment in Fiscal Policy

Next is the incrementality of fiscal policy. He foresees a slight widening of the deficit, estimating an increase of $12-15 billion per month starting January 1 due to the impacts of the OBBBA (Omnibus Bill Budget Control Act). “We are entering a phase of fiscal dominance,” he adds.

The analyst connects recent market challenges to a contraction in the deficit attributed to tariffs, suggesting that even a reversal towards expansion will be significant. “While $12-15 billion per month won’t counteract the tariff effects, it’s a move in the right direction compared to what we saw in November and December, and every bit of incrementality is important.” He also mentions a smaller support from the eSLR change effective January 1 and anticipates broader banking deregulation as a trend for 2026.

3. Disinflation and Policy Direction

The third theme is disinflation combined with the future policy trajectory. He highlights decreasing market-based inflation expectations, referencing the one-year inflation swap, and frames the overall situation as a “Goldilocks setup.” “In this disinflationary phase, we find ourselves in a Goldilocks situation,” he indicates. “The economy shows signs of weakness but isn’t completely down, and softer inflation allows the Fed to cut rates.”

He notes that the current market outlook remains cautious — “there’s only a 13% chance for a rate cut in January, with a projection of only two cuts for the entirety of the year” — and contrasts that with his expectation of around four cuts if standard policy approaches are maintained, which could increase further under a potential Trump leadership.

4. Political Initiatives and the Role of the Fed Chair

Lastly, political dynamics could play a significant role through the choice of the Federal Reserve chair. “Trump tends to prioritize loyalty,” he remarks, believing that Trump felt slighted by Powell. He identifies Kevin Hassett as “very likely” to be chosen for the position, given this relationship. Further, he discusses the potential market reactions: “Gold is likely to prosper with a Hassett nomination, while equities might face some initial effects but are expected to rise overall.”

In conclusion, he offers a cautiously optimistic viewpoint regarding Bitcoin, noting that if these macro conditions align favorably, it could benefit the cryptocurrency. “In theory, everything should help crypto,” he states. “However, personally, I may not engage with it at this moment because I prefer gold. That said, now might be the time to consider being bullish on Bitcoin, as it's important to monitor market shifts and assess positive responses as liquidity starts to improve.”

As of the latest update, Bitcoin (BTC) is trading at approximately $87,053.

Bitcoin price chart