Bitcoin traders and investors are buzzing with optimism as signals from commodity and foreign exchange markets point toward a significant reflation scenario in 2026, potentially igniting a renewed bull market for BTC and other crypto assets. According to André Dragosch, a prominent analyst, the recent rally in precious metals is a clear indicator of reflation, echoing patterns seen in 2020/21 that propelled Bitcoin to new heights. This development comes after a lackluster 2025 for Bitcoin, where despite massive institutional buying, the asset underperformed major markets with a negative return of -6.5%. As we delve into this analysis, we'll explore how reflation could reshape Bitcoin trading strategies, highlight key market indicators, and identify potential trading opportunities in this evolving landscape.

Understanding the Reflation Signal and Its Impact on Bitcoin

The core narrative revolves around reflation, characterized by rising commodity prices and a weakening dollar, which Dragosch argues is unfolding across markets. Precious metals like gold have led the charge, followed by industrial metals such as copper, raw commodities, and now energy sectors. This broad-based rally suggests inflation expectations are climbing, as evidenced by increasing market-based break-even rates. For Bitcoin, positioned as a macro asset, this environment is crucial. Dragosch estimates that about 90% of Bitcoin's performance variations over the past decade stem from four major macro factors, primarily global growth expectations and risk appetite, which often correlate with global liquidity growth.

In 2025, Bitcoin faced headwinds from long-term holder selling—veterans dumping hundreds of thousands of BTC after hitting the $100k milestone—triggering retail panic and the notable 10/10 liquidation event on October 10, 2025. Despite this, institutional demand remained robust: Treasury companies and global Bitcoin ETPs absorbed over 4.2 times the new supply, with ETPs alone purchasing nearly $21 billion worth of BTC. Yet, macro tailwinds were absent, with the ISM Manufacturing Index in contraction for over three years—the longest streak on record. Bitcoin's correlation with this index underscores its sensitivity to the US business cycle, performing well in risk-on environments and poorly in risk-off ones.

Trading Opportunities in a Reflationary Environment

Looking ahead to 2026, traders should monitor for a mean-reversion in the ISM Index, which could catalyze Bitcoin's takeoff. Dragosch notes that macro sensitivity is returning, long-term holder selling has slowed, and institutional inflows continue unabated. Major US wirehouses are poised to deploy substantial capital via ETFs, while 401k integrations and companies like TwentyOne could rival MicroStrategy's Bitcoin holdings. This setup positions Bitcoin for a rotation from precious metals, especially as the BTC/Gold ratio appears undervalued and oversold. Historical data shows gold leading Bitcoin by 4-7 months based on Granger causality tests, suggesting the current gold rally could precede BTC gains.

From a trading perspective, Bitcoin has stabilized, potentially building a base since its lows on November 21, 2025. Traders might consider long positions if reflation indicators strengthen, targeting support levels around recent stabilization points and resistance near $100k. On-chain metrics support this: decelerating long-term holder sales and persistent institutional absorption of daily new supply (multiples thereof in 2026) indicate building momentum. Retail interest, as measured by Google searches, may have waned amid the metals rally, but a risk-on shift could draw it back. Additionally, an impending change in Fed leadership and dollar devaluation reinforce the reflation theme, potentially boosting global risk appetite.

Broader Market Implications and Crypto Correlations

Beyond Bitcoin, this reflation could uplift the broader crypto market, with assets like ETH and altcoins benefiting from increased liquidity and risk tolerance. Institutional flows remain a key driver; even in 2025's down year, adoption persisted, hinting at explosive growth when macro conditions align. Traders should watch forex markets for dollar weakness and commodity volumes for confirmation. If reflation materializes as the biggest since 2020/21, Bitcoin could conquer more of the store-of-value market, expanding its total addressable market (TAM). In summary, while 2025 was idiosyncratic, 2026's reflation signals a renewed bull phase—stay vigilant, stack sats, and position for upside as macro tailwinds return.