Over the past 14 years, China has reduced more than $500 billion in U.S. debt while steadily increasing its gold reserves.
In fact, Beijing has been buying gold for 18 months in a row, showing a clear preference for hard assets over government bonds.
China’s Long-Term Move Away From U.S. Debt
Importantly, this order does not affect China’s official foreign exchange reserves held by the central bank. Instead, it targets commercial banks and their growing exposure to dollar-denominated assets.
With China stepping back as one of the biggest buyers of U.S. Treasuries, the traditional support system for American bonds is weakening.
The absence of such a large buyer could lead to higher volatility in the bond market and rising interest rates.
What This Means for Bitcoin and Crypto
Investors look for safer options. In the past, gold has benefited the most from this trend. Gold prices jumped nearly 72% in a year and recently touched a record high of around $5,600. Now prices are easing as some investors book profits.
Usually, after gold peaks, investors shift part of their money into Bitcoin. This is because Bitcoin is seen as a digital store of value, similar to gold.
Right now, Bitcoin has dropped from its all-time high of $126,000 and is trading near $69,712. Many investors see this as a discounted buying level.
Other major cryptocurrencies like ETH, SOL, XRP, ADA & Doge are also down 40% to 70% from their highs. This market pullback is making crypto assets more attractive for long-term buyers.
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