- China plans to reduce its US Treasury holdings and increase investments in Bitcoin and gold to protect itself from rising global tensions, according to BlackRock.
- This move could disrupt US financial markets, spike mortgage rates, and further position Bitcoin as a key asset in an increasingly unstable world.
China is making waves in global finance by shifting its investment strategy in a big way. According to BlackRock, the country plans to dump part of its massive US Treasury holdings and move into Bitcoin and gold—a dramatic change aimed at protecting itself from rising global tensions.
Building a Fortress with Bitcoin and Gold
As of early 2025, China holds $784.3 billion in US Treasuries, $229.6 billion in gold, and 194,000 BTC valued at roughly $18 billion. Jay Jacobs, head of thematics and equity ETFs at BlackRock, told CNBC that central banks worldwide have been quietly moving away from the US dollar for decades. Now, Bitcoin and gold are quickly becoming the preferred alternatives.
Jacobs highlighted that Bitcoin thrives in uncertain environments, unlike traditional investments that rely on economic stability and steady growth. This unique quality makes Bitcoin particularly attractive as global politics grow increasingly tense.
Impact on US Financial Markets
If China begins selling a significant chunk of its US Treasuries, it could deliver a heavy blow to American financial markets. Treasury securities form the backbone of US government financing, and a sell-off would raise borrowing costs sharply.
Adding to the potential fallout, China also owns a large share of US mortgage-backed securities (MBS). Experts warn that if China starts dumping these assets, it could crash the MBS market, spike mortgage rates, and send shockwaves across global finance. Guy Cecala, executive chair at Inside Mortgage Finance, pointed out that China’s financial clout gives it real power to disrupt US markets if it chooses to act aggressively.
Mortgage Rates Under Threat
Already, American homeowners are feeling the squeeze with a 30-year fixed mortgage rate sitting at 6.83% as of mid-April. If China sells off its MBS holdings, mortgage rates could climb even higher, making it harder for homeowners to refinance and pushing many first-time buyers out of the market altogether. Banks could tighten lending standards, demanding higher credit scores and larger down payments.
Melissa Cohn of William Raveis Mortgage warned that China’s move could backfire by damaging its own investments and destabilizing the renminbi, but the risk remains significant.
In a world growing increasingly divided, BlackRock’s Jacobs believes that Bitcoin isn’t just another asset—it’s becoming a shield against geopolitical fragmentation. As nations like China prepare for a less stable future, crypto could play an even bigger role in global finance.
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