US Q1 GDP Expected at 0.3% Annual Rate, Weakest Since 2022

Today, the Bureau of Economic Analysis is scheduled to release its advance estimate for the US Q1 GDP at 08:30 ET. The consensus expectation is a 0.3% seasonally adjusted annual rate. This figure, if confirmed, would represent the weakest quarterly performance since early 2022. This economic slowdown contrasts sharply with the recent inflow of over $3 billion into spot Bitcoin ETFs last week, which some market participants interpret as a shift in capital preference towards digital assets amidst macroeconomic stagnation.

GDP forecasts are divided. The Atlanta Fed’s Nowcast predicts a contraction of 1.5%, while the New York Fed’s model projects growth of 2.6%. 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’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 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. The upcoming data releases will provide additional insights into the economic landscape and the potential impact on both traditional markets and digital assets.