China Chooses to Divest US Bonds, Turning to Bitcoin and Gold as Alternative Investments
** slaughterhouse of finance: BlackRock's Bitcoin Bet**
The sharks in the shark tank of finance are getting ready to chomp down on some digital gold - BlackRock is reportedly planning to sell a chunk of its U.S. Treasury holdings and jump headfirst into the Bitcoin and gold markets. Some folks see this move as a strategy to protect against escalating global conflict. 🦈💸🔥
Jay Jacobs, the man in charge of thematic investments and stock ETFs at BlackRock, spilled the beans on CNBC. He pointed out that central banks have been ditching the U.S. dollar for years, and Bitcoin and gold have become the go-to alternatives among these banks over the past few years.
Jacobs went on to say that crypto assets and short-term yields are moving independently of U.S. tech stocks, and political developments could send the markets into a frenzy. He also hinted that as uncertainty increases, Bitcoin tends to strengthen. 🔫β %.
China's Gold Rush
According to the U.S. Treasury Department, by February 2025, China had $784.3 billion locked up in U.S. treasuries. But check this out - by the end of March, China's gold reserves were estimated to be approximately $229.6 billion, and they reportedly hold around 194,000 BTC worth about $18 billion, according to Bitbo data.
Guy Cecala, head honcho of the Inside Mortgage Finance Executive Committee, warned CNBC that China has the power to cause some ugly surprises in U.S. markets if they decide to act. 💣🤝
A massive sell-off in U.S. Treasury holdings could cause major problems for the system, as it forms the financial backbone of the U.S. government. China also holds a substantial portion of the $1.32 trillion worth of U.S. mortgage-backed securities (MBS) held by foreigners. If China decides to dump their MBS, other countries like Japan, Taiwan, and Canada might follow, putting the global financial system at risk. 🌍🔥
China's Dance with Dollars
Mortgage interest rates in the U.S. are closely tied to MBS, and if China decided to sell their MBS holdings, prices could tumble, causing interest rates to skyrocket. Those with adjustable-rate mortgages would be the first to feel the pain.
Eric Hagen, a mortgage and specialty finance analyst at BTIG, told CNBC that if China, Japan, or Canada decided to take financial revenge, it could widen mortgage spreads. Mortgage rates were already a thorn in the side of many American homeowners, sitting at 6.83 percent as of April 17, 2025. Higher interest rates could make refinancing options less available, leading to larger monthly payments. For first-time homebuyers, higher rates could drive up costs and discourage sellers from listing their properties. 🏠💔
Higher interest rates could also lead banks to tighten their lending standards, requiring higher credit scores and larger down payments to qualify for a loan. 📈💸
Jay Jacobs of BlackRock suggested that these changes could be a result of "geopolitical fragmentation." He explained that while traditional assets are all about stability, cryptocurrencies like Bitcoin thrive on chaos and volatility. 🌪️💥
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According to some experts, China might think twice before taking such a drastic step, as it could also risk damaging its own interests and disrupting global currency stability. But whatever the case may be, BlackRock's move is a clear sign that Bitcoin is here to stay, and the game of thrones is heating up. 🦁💰🔥
- Jay Jacobs, from BlackRock, has expressed his view that Bitcoin and gold are becoming preferred alternatives for central banks, as they have been transitioning away from the U.S. dollar for years.
- By 2025, China had $784.3 billion invested in U.S. treasuries, but their gold reserves were estimated to be approximately $229.6 billion, and they reportedly hold around 194,000 BTC worth about $18 billion, according to Bitbo data.
- In the future, Jay Jacobs predicts that Bitcoin may strengthen as political uncertainties increase, and he sees crypto assets and short-term yields moving independently of U.S. tech stocks.
- If China decides to sell its substantial U.S. mortgage-backed securities (MBS) holdings, other countries like Japan, Taiwan, and Canada might follow, putting the global financial system at risk. Higher interest rates could result from this sell-off, making refinancing options less available and increasing monthly payments for homeowners.
- Jay Jacobs suggests that the changing financial landscape could be a result of "geopolitical fragmentation," implying that while traditional assets seek stability, cryptocurrencies, like Bitcoin, thrive on chaos and volatility.
