At 08:30 ET today, the Bureau of Economic Analysis is set to release its advance estimate for US Q1 GDP, with consensus expectations at a 0.3% seasonally adjusted annual rate.
If confirmed, this would mark the weakest quarterly print since early 2022 and contrast starkly with the inflow of over $3 billion into spot Bitcoin ETFs last week, reflecting what some market participants interpret as a pivot in capital preference toward digital assets amid macroeconomic stagnation.
[Editor’s Note: Q1 GDP will not include tariff impact as the cut-off date came before ‘Liberation Day.’]
GDP forecasts show a stark divide. The Atlanta Fed’s Nowcast has called a contraction of 2.7%, while the Philadelphia Fed’s model projects growth of 2.5%, last updated on Feb. 14.
Regardless of the final figure, the drag from the record goods-trade deficit is a common feature across estimates, with some models attributing up to 1.9 percentage points of negative contribution to it.
This trade shortfall appears to be a delayed consequence of tariff front-loading, spurring preemptive imports during the prior quarter. Inventories are expected to be flat, while consumer sentiment continues to deteriorate, hitting a five-year low. Business capital expenditure has also been curtailed.
Inflationary persistence further complicates the picture. March’s Consumer Price Index rose 2.4% year-over-year, and the Core PCE index, the Federal Reserve’s preferred inflation gauge, stood at 2.8% in February.
Interest rate futures now price in over 90% probability of a rate cut by December. Concurrently, Treasury yields have declined and the dollar has weakened, reinforcing stagflation comparisons with the 1970s as economic growth stalls and inflation remains above target.
Bitcoin macro hedge for 2025?
Bitcoin’s market setup diverges notably from the traditional macro picture. Realized capitalization for the top digital asset continues to make new all-time highs, currently at $883 billion and signaling continued inflows despite the pullback from January’s price peak.
Data show that approximately 20,000 BTC exited exchanges in the past week, the highest weekly net outflow in two years, primarily driven by whale accumulation of 19,255 BTC. Meanwhile, spot Bitcoin ETFs captured $3.4 billion in inflows, the third-largest weekly intake to date.
BlackRock’s IBIT alone recorded $643 million on April 23, its second-largest single-day inflow.
Volatility metrics suggest a broader evolution in market structure. Realized volatility has compressed by roughly 50% from its 2022 peaks, and the volatility spread between Bitcoin and the Nasdaq now sits near cycle lows.
This compression has lent credence to characterizations of Bitcoin as a maturing asset class, a view reinforced by VanEck’s observation that its volatility and co-movement profile increasingly resemble that of gold rather than equities.
The juxtaposition between a near-stalling US economy and a record-high cumulative invested cost in Bitcoin reflects diverging narratives around capital preservation.
The trade deficit drag highlights the limitations of a tariff-distorted goods economy, while Bitcoin’s borderless framework offers a contrasting vehicle for global allocation.
The backdrop of tepid growth and elevated inflation has reopened discourse around digital assets as potential stagflation hedges, particularly as ETF demand endures despite recessionary signals.
With major funds from the likes of BlackRock and Fidelity continuing to absorb supply, flows into digital assets show resilience that is disconnected from conventional macro indicators.
Market participants now look toward the May 1 Core PCE update and next week’s FOMC decision for further clarity on rate trajectory and inflation conditions.
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