[Update: GDP came in well under estimates, contracting by 0.3%.]
At 08:30 ET at present, the Bureau of Financial Evaluation is about to launch its advance estimate for US Q1 GDP, with consensus expectations at a 0.3% seasonally adjusted annual fee.
If confirmed, this may mark the weakest quarterly print since early 2022 and distinction starkly with the influx of over $3 billion into spot Bitcoin ETFs final week, reflecting what some market individuals interpret as a pivot in capital choice towards digital belongings amid macroeconomic stagnation.
[Editor’s Note: Q1 GDP will not include tariff impact as the cut-off date came before ‘Liberation Day.’]
GDP forecasts present a stark divide. The Atlanta Fed’s Nowcast has referred to as a contraction of two.7%, whereas the Philadelphia Fed’s mannequin tasks development of two.5%, final up to date on Feb. 14.
Whatever the last determine, the drag from the report goods-trade deficit is a standard characteristic throughout estimates, with some fashions attributing as much as 1.9 share factors of damaging contribution to it.
This commerce shortfall seems to be a delayed consequence of tariff front-loading, spurring preemptive imports throughout the prior quarter. Inventories are anticipated to be flat, whereas client sentiment continues to deteriorate, hitting a five-year low. Enterprise capital expenditure has additionally been curtailed.
Inflationary persistence additional complicates the image. March’s Shopper Worth Index rose 2.4% year-over-year, and the Core PCE index, the Federal Reserve’s most well-liked inflation gauge, stood at 2.8% in February.
Rate of interest futures now worth in over 90% chance of a fee reduce by December. Concurrently, Treasury yields have declined and the greenback has weakened, reinforcing stagflation comparisons with the Nineteen Seventies as financial development stalls and inflation stays above goal.
Bitcoin macro hedge for 2025?
Bitcoin’s market setup diverges notably from the standard macro image. Realized capitalization for the highest digital asset continues to make new all-time highs, at present at $883 billion and signaling continued inflows regardless of the pullback from January’s worth peak.
Information present that roughly 20,000 BTC exited exchanges up to now week, the best weekly internet outflow in two years, primarily pushed by whale accumulation of 19,255 BTC. In the meantime, spot Bitcoin ETFs captured $3.4 billion in inflows, the third-largest weekly consumption to this point.
BlackRock’s IBIT alone recorded $643 million on April 23, its second-largest single-day influx.
Volatility metrics recommend a broader evolution in market construction. Realized volatility has compressed by roughly 50% from its 2022 peaks, and the volatility unfold between Bitcoin and the Nasdaq now sits close to cycle lows.
This compression has lent credence to characterizations of Bitcoin as a maturing asset class, a view bolstered by VanEck’s statement that its volatility and co-movement profile more and more resemble that of gold relatively than equities.
The juxtaposition between a near-stalling US financial system and a record-high cumulative invested price in Bitcoin displays diverging narratives round capital preservation.
The commerce deficit drag highlights the restrictions of a tariff-distorted items financial system, whereas Bitcoin’s borderless framework presents a contrasting car for world allocation.
The backdrop of tepid development and elevated inflation has reopened discourse round digital belongings as potential stagflation hedges, notably as ETF demand endures regardless of recessionary alerts.
With main funds from the likes of BlackRock and Constancy persevering with to soak up provide, flows into digital belongings present resilience that’s disconnected from typical macro indicators.
Market individuals now look towards the Might 1 Core PCE replace and subsequent week’s FOMC determination for additional readability on fee trajectory and inflation situations.
