In the analysis dated March 27, 2025, entitled “What’s Next for Bitcoin? A Signal Found in Real-Time Data,” Truflation underscores a consistent trend: each time its inflation index undergoes a significant downtrend that eventually pauses or reverses, Bitcoin has historically surged shortly thereafter.
What’s Next for Bitcoin?
According to Truflation’s findings, the landscape has been influenced by the aftermath of COVID-19, during which global central banks drastically reduced interest rates to near zero, injecting liquidity into the economy. This era of accessible funds coincided with Bitcoin’s ascent to record highs in 2021. However, in 2022 and 2023, unwavering inflation emerged, leading the US Federal Reserve to change its strategy. Interest rate increments and quantitative tightening became paramount in combating price pressures, with the Federal Reserve explicitly targeting a 2% consumer price inflation rate.
As per the Truflation report, real-time inflation figures dipped to as low as 2% in June 2023. The official Consumer Price Index (CPI), as reported by the Bureau of Labor Statistics, showed a similar trend about six weeks later, hitting a low of 3% in July 2023. However, from mid-2023 onward, Truflation’s index exhibited a cyclical behavior instead of a consistent decline, fluctuating between higher and lower limits, showcasing a pattern of disinflation that would subsequently stabilize or reverse. Truflation now asserts that these cyclical “turning points” are closely linked to subsequent increases in Bitcoin’s price.
The report highlights four unique periods from September 2023 to September 2024 where Truflation’s index declined then either leveled off or bounced back. In all of these instances, Bitcoin’s price rallied shortly afterward. Truflation posits that a fifth occurrence may currently be taking place: the inflation index dropped sharply at the start of 2025, reaching around 1.30%—a level not seen for several months—before climbing back to 1.80%. This scenario echoes previous disinflation lows that, according to Truflation’s analysis, foreshadowed a new surge in Bitcoin interest.
“When the disinflation trend from Truflation pauses or reverses, Bitcoin typically experiences a rally shortly after. This has occurred multiple times already, and if history is any indicator, we might be witnessing it again soon,” the analysis notes.
The underlying factor, as explained by Truflation, relates to Bitcoin’s forward-thinking nature and its responsiveness to shifts in liquidity conditions. Strong disinflation often spurs speculation that the Federal Reserve might halt rate increases and adopt a more accommodative stance. While continuous disinflation can incite fears of recession, a slowdown or halt in that disinflation trend frequently reassures markets that the economy is not on the verge of a downturn.
This “soft landing” scenario fosters a risk-on attitude. Traders and investors who sense that inflation is subdued enough to postpone further tightening—or encourage rate cuts—often direct their optimism towards assets like Bitcoin.
The report acknowledges that no single data point, including Truflation’s own, holds absolute power over such a complex and widely traded asset like Bitcoin. Nonetheless, it emphasizes that real-time inflation expectations resonate throughout global markets, swaying equities, commodities, and foreign exchange trading, alongside cryptocurrency. By anticipating changes in these expectations, some investors may position themselves ahead of the curve when official CPI statistics and central bank announcements ultimately confirm or conflict with the evolving trends.
“Truflation does not act upon Bitcoin in isolation. No singular data source ever does. However, inflation expectations create ripples across a vast array of markets—from equities to commodities—and profoundly influence bond yields and foreign exchange markets,” the analysis concludes.
As of now, BTC is valued at $84,461.
Featured image created by DALL.E, chart from TradingView.com
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