Chinese regulators have instructed major commercial banks to limit new purchases and gradually reduce their holdings of U.S. Treasury bonds, signaling a strategic shift in the country's management of dollar-denominated assets. This guidance, aimed at mitigating "concentration risks" and exposure to market volatility, does not apply to China's official foreign exchange reserves held by the central bank.
Official data reveals China's holdings of U.S. Treasuries have fallen to approximately $682.6 billion, the lowest level in 17 years and a significant drop from a peak of $1.3 trillion a decade ago. Over the past 14 years, the country has reduced its U.S. debt by more than $500 billion. Concurrently, Beijing has been steadily increasing its gold reserves, purchasing the precious metal for 18 consecutive months.
Financial markets reacted to the news, with the U.S. 10-year Treasury yield rising to around 4.24-4.248%. Analysts note that China's move away from being a major buyer could weaken traditional support for American bonds, potentially leading to higher bond market volatility and rising interest rates.
Experts suggest this macroeconomic shift could create new opportunities for Bitcoin and the broader cryptocurrency market. As China demonstrates a preference for hard assets like gold—which saw prices jump nearly 72% in a year to a record high near $5,600—investors historically seek alternative stores of value. Bitcoin, often viewed as "digital gold," is positioned to potentially benefit from this capital rotation.
Currently, Bitcoin is trading near $69,712, down from its all-time high of $126,000. Other major cryptocurrencies, including Ethereum (ETH), Solana (SOL), XRP (XRP), Cardano (ADA), and Dogecoin (DOGE), are also down 40% to 70% from their peaks. This market pullback, combined with the search for non-traditional safe havens, is making crypto assets appear more attractive for long-term buyers.
