The bitcoin price has dropped below the $63,000 mark amid concerns that the U.S. economy is slipping into stagflation.

"Some worrying data has come out of the U.S., with a weaker than expected GDP print that points to a more sluggish economy while the higher Core PCE warns of an inflation problem that continues to be a thorn in the Fed's side," Monday's QCP Capital report said. The report added that if U.S. GDP continues weakening and inflation remains sticky, "the U.S. might go into a stagflation scenario, a combination of negative GDP growth and high inflation."

Last week, the U.S. Department of Commerce released data that showed first-quarter GDP growth came in at an annualized 1.6% — well below the 2.5% consensus expectation. 

The bitcoin price slipped by over 2.6% in the past 24 hours and was changing hands for $62,209 at 4:51 a.m. ET., according to The Block's Price Pages. 

The price of bitcoin has fallen below the $63,000 mark. Image: The Block.

Bullish driver could come from liquidity injection

Despite the macroeconomic uncertainty, QCP Capital analysts see the potential for a $1.4 trillion liquidity injection in the U.S. economy. "This could be the main driver for bullishness into the end of the year," the analysts said.

According to QCP Capital analysts, the U.S. Treasury General Account has close to $1 trillion in assets after large U.S. treasury issuances this year and strong tax receipts. "The U.S. Government can choose to spend the money in the TGA, potentially injecting $1 trillion in liquidity into the financial system; we feel this is likely, given how close we are to U.S. elections," the report added.

On Wednesday, investors may receive news via the U.S. Treasury's refinancing announcement that could signal relief for risk assets. This announcement will detail the three-month borrowing needs and the balance to be held in the TGA. If the TGA is maintained at current levels or lowered, the release of funds could boost economic activity and possibly keep risk assets in bullish territory.

Upcoming interest-rate decision

Investors will also be watching another two announcements this week: Wednesday's Federal Open Market Committee Meeting, where the U.S. Federal Reserve is expected to keep rates steady, and Friday's U.S. employment report. These announcements will influence investor expectations regarding the timing of potential rate cuts in 2024.

"Markets are now pricing in one rate cut in 2024; this is a stark difference to seven priced at the start of the year, and three in March," QCP Capital analysts said.

The CME's FedWatch tool forecasts a 99.4% likelihood that rates will remain steady at this week's Federal Open Market Committee on May 1. In the past two weeks, interest-rate traders have also trimmed their prediction for a rate cut at June's FOMC meeting to 12.1% — down from 16.4%.

Equity markets remain robust

The bitcoin market has declined further, even as wider risk assets remain robust amidst increasing uncertainty about when the Fed will initiate rate cuts this year.