US GDP contraction and flat inflation reignite hopes of dovish Fed tilt that could benefit bitcoin, analysts say

Following this week's macro data releases and BTC's jump over $97,000, analysts believe looser monetary policies in the United States will potentially benefit bitcoin more than equities.

U.S. GDP shrank for the first time in three years while Core Personal Consumption Expenditures Price (PCE) printed flat, easing inflation concerns as the year-over-year rate dropped from 3.0% to 2.6%. Despite the mixed macro picture, inflation progress has reignited bets on Fed rate cuts, Valentin Fournier, lead research Analyst at BRN, stated in a May 2 update.

“With inflation trending toward the Fed’s 2% target, expectations for multiple rate cuts are strengthening,” Fournier said. “This could lead to a new wave of liquidity injections, benefiting alternative risk assets like crypto more than equities, which might struggle in a slowing economy.”

Bitcoin has gained over 13% since “Liberation Day”, reaching a two-month high and outperforming the stock market. The S&P 500 has grown less than 1% in the last 30 days, and lagged behind BTC following President Donald Trump’s return to office.

Price focus over strategic rotation

Wall Street’s bitcoin demand also reacted to this possibility, per Fournier. Renewed inflows on Thursday replaced an initial pullback right after U.S. reports on Wednesday. Spot BTC exchange-traded funds saw $442 million in positive flows on May 1 compared to $56 million in outflows on April 30, according to The Block’s data page. Ether funds noted a similar trading pattern over the same two-day period, but recorded more modest capital movement.

BRN’s expert sees bullish price action as the main demand driver now. Previously, the research desk attributed the spot bitcoin ETF influx to a capital rotation from stocks and other traditional assets.

“That said, net ETF flows have generally slowed over the past week, indicating that the reallocation phase could be over and current inflows are now driven by price momentum,” Fournier shared.

Jobs data and Fed decision

The U.S. Jobs Report — which covers nonfarm payrolls (jobs added or lost), unemployment rate, and wage growth — will likely shed light on the Fed’s upcoming funding rate decision, Douro Labs CEO Mike Cahill said via email.

Earlier this week, the private sector disclosed 62,000 new jobs in April, lower than March numbers. Should Friday’s statistics show another downbeat, Cahill said BTC’s price may rise again as the argument for rate cuts strengthened. “Looking ahead to the jobs report, weaker labor data could add fuel to the fire by reinforcing a dovish Fed narrative,” per Cahill’s comments.

“Institutions are watching these macro signals closely, because Bitcoin is no longer being used as a risk asset—today, it's stepping into what it was always meant to be: an interest rate-sensitive, globally traded macro instrument.”

On May 6 and May 7, the Fed will meet to assess the U.S. economic outlook. Despite a push for monetary easing from crypto enthusiasts, and even President Trump himself, the CME FedWatch Tool suggests a 93% probability the central bank will not cut rates at this meeting.