- China plans to dump US Treasuries and boost its Bitcoin and gold holdings to shield itself from rising global tensions.
- Experts warn this move could spike US mortgage rates and shake global financial markets.
In a seismic shift with far-reaching consequences, China is preparing to slash its US Treasury holdings in favor of Bitcoin and gold, according to BlackRock’s head of thematics and equity ETFs, Jay Jacobs. This bold financial maneuver could send shockwaves through global markets and reshape the future of investing.
As of early 2025, China holds a staggering $784.3 billion in US Treasuries, alongside $229.6 billion in gold and approximately 194,000 Bitcoin valued at $18 billion. But in a world increasingly defined by geopolitical tensions, China is realigning its strategy toward assets that thrive in uncertainty.
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Jacobs told CNBC that central banks have been slowly retreating from the US dollar for decades, but the momentum has accelerated recently. Bitcoin and gold have emerged as preferred safe havens, outperforming traditional assets tied to economic stability. Unlike stocks and bonds, Bitcoin “thrives when there is more uncertainty,” Jacobs explained, highlighting the crypto asset’s growing importance in a fracturing global order.
China Builds Bigger Bitcoin and Gold Positions
China’s increasing positions in Bitcoin and gold are sending a clear message: diversification away from US assets is no longer theoretical—it’s happening. Beyond Treasuries, China is also a major holder of US mortgage-backed securities (MBS), part of the $1.32 trillion owned by foreign nations. Experts warn that a mass sell-off could devastate the MBS market, spike US mortgage rates, and ripple across the global economy.
“If China wanted to hit us hard, they could unload Treasuries,” Guy Cecala, executive chair at Inside Mortgage Finance, cautioned. However, analysts like Melissa Cohn point out that China faces a delicate balance—damaging the US financial system too aggressively could backfire by hurting China’s own holdings and destabilizing the renminbi.
Mortgage Rates Face New Pressures
If China starts offloading MBS holdings, American homeowners could feel the pain almost immediately. A flood of MBS onto the market would crash prices and cause mortgage rates to soar. First-time homebuyers, adjustable-rate mortgage holders, and refinancing hopefuls would be especially vulnerable.
As geopolitical fragmentation deepens, Bitcoin is not just surviving—it’s thriving. China’s pivot signals a future where traditional assets may no longer offer the safe harbor they once did.
