Since mid-2023, Truflation's index has shown a cyclical pattern of disinflation, with fluctuations that correlate with subsequent price increases in Bitcoin.

In early 2025, the inflation index dropped to 1.30% before rebounding to 1.80%, reflecting previous patterns that typically precede Bitcoin price rallies.

According to Truflation's analysis on March 27, 2025, Bitcoin's price is expected to surge following a recent downtrend in its inflation index.

In response to rising inflation during 2022 and 2023, the Federal Reserve implemented interest rate hikes and quantitative tightening to target a 2% inflation rate.

The analysis connects Bitcoin's price movements to historical monetary policy shifts, particularly following the COVID-19 pandemic when central banks lowered interest rates and injected liquidity.

This liquidity injection coincided with Bitcoin's rise to record highs in 2021, illustrating the impact of monetary policy on cryptocurrency valuations.

As of the latest report, Bitcoin was trading at $84,461, indicating its current strong market performance.

While Truflation's data offers valuable insights, it is important to note that no single data point can solely dictate Bitcoin's price due to the complexity of global market influences.

Inflation expectations play a significant role in shaping broader market dynamics, affecting not only Bitcoin but also equities and commodities.

Truflation reported real-time inflation readings as low as 2% in June 2023, with the official Consumer Price Index (CPI) reflecting a similar trend by July 2023.

Truflation suggests that Bitcoin's sensitivity to liquidity changes indicates that disinflation may lead the Federal Reserve to halt rate hikes, fostering a risk-on sentiment among investors.

A pause or reversal in disinflation trends often reassures markets, emboldening risk-on sentiment and encouraging increased investment in Bitcoin.