Alternative inflation data and sensitive assets: When will the Fed change course?

Recently, significant discrepancies have emerged between official inflation indicators and measurements based on real-world data. This is not just a technical statistical issue — this gap could fundamentally alter Federal Reserve monetary policy decisions and, consequently, impact all risk-sensitive assets, especially cryptocurrencies like Bitcoin. Investors are beginning to realize that traditional metrics may not fully reflect the true inflation situation in the United States.

Alternative Metrics Reveal Actual Price Cooling

Data from Truflation, a platform that aggregates millions of real-time price points across housing, food, energy, insurance, and services sectors, show a drastically different picture than government reports. Truflation’s CPI recently stood at 0.86% year-over-year — a sharp decline in just one day. At the same time, the core Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure, reached only 1.38% — well below the central bank’s 2% target.

In contrast, official government data report CPI at 2.7% and core PCE at 2.8%. The divergence between market-sensitive data and delayed official releases is growing. Market observers are increasingly aware that inflationary pressures are easing faster than traditional communications suggest. Truflation offers transparency by tracking actual transactions rather than relying on surveys and estimates, which can lag by several weeks.

Why Do Fed-Sensitive Data Matter More?

Federal Reserve decisions directly influence the money supply and overall risk appetite in markets. History shows that when inflation declines and interest rates fall, the dollar weakens, prompting investors to shift capital toward riskier assets. This phenomenon has traditionally supported rising asset prices denominated in dollars and more volatile instruments, including Bitcoin and the broader crypto market.

The issue is that the Fed signals caution regarding rapid rate cuts, even as alternative sensitive data suggest conditions are improving quickly. Some market participants argue that policymakers may remain too conservative given the actual data. If the gap between official indicators and alternative data widens further, pressure to change policy stance could increase.

Dollar Under Pressure — What Does This Mean for Cryptocurrencies?

The US dollar index recently fell below a multi-year support level that had held for over a decade. For technical analysts, this signals a potential significant downtrend if the level is not reclaimed. Macroeconomic investors, including Real Vision founder Raoul Pal, have long argued that dollar weakness has a structurally positive impact on global markets — reducing the burden of dollar-denominated debt and supporting flows into risk assets and liquidity.

If alternative inflation data continue to indicate much lower price pressures than official figures, political and market pressure on the Fed to reassess its strategy will grow. This scenario would be favorable for cryptocurrencies and other risk-sensitive instruments, which traditionally benefit from dollar weakening and increased global liquidity. Markets are now watching whether alternative indicators will become influential enough to prompt monetary authorities to act — and whether such actions will translate into real changes in conditions for assets sensitive to economic cycles and monetary policy.