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Chinese holdings of US Treasuries have fallen to their lowest level since 2008, now sitting near $694B, down from over $1.3T in 2013. This is not a cyclical shift. It is a structural repositioning that reflects a deeper change in the global financial order.
We have covered this theme consistently. The relative decline of US financial dominance and the erosion of the petrodollar system are no longer theoretical. This chart is one of the clearest signals yet that the world’s second-largest economy is reducing reliance on the US-led system.
The catalyst is simple. The 2022 freezing of Russia’s $300B in reserves reframed Treasuries from risk-free assets into political instruments. For China, holding US debt is no longer just financial, it is geopolitical. In any escalation scenario, those reserves carry risk.
As a result, China is not just diversifying. It is stepping back from a system where control ultimately sits with Washington.
That capital is moving into assets with no counterparty risk. Gold has overtaken Treasuries in global reserve share, with the The People’s Bank of China (PBOC) continuing to accumulate. Even when accounting for custodial shifts, the direction is clear. Exposure is falling, and so is trust.
This feeds directly into the de-dollarisation loop. Less demand for dollars means less recycling into Treasuries, placing structural pressure on US funding and exposing the fragility of a system reliant on external buyers.
What makes this cycle different is the emergence of a neutral alternative. Gold plays a role, but Bitcoin introduces something new. A non-sovereign, scarce asset that sits outside the control of any state.
Both sides are already positioning. China holds significant BTC exposure, while the US has formalised its stance with a Strategic Bitcoin Reserve. This is no longer speculative, it is strategic.
The takeaway is clear. This is not just a reduction in Treasury holdings. It is the gradual unwinding of a system that has defined global finance for decades.
We are watching the early stages of a new order take shape. One where Treasuries lose dominance, gold regains relevance, and Bitcoin emerges as the neutral layer between competing powers.
In simple terms, China is rotating out of political IOUs and into sovereign autonomy. Bitcoin sits at the centre of that shift.
TACO Tuesday:
Yes, it may be Wednesday in Melbourne, but it is still Tuesday in Washington, where once again the US President has driven volatility through late-night social media posts.
Markets were sent into uncertainty after renewed threats targeting Iran, with timelines around potential strikes narrowing and participants counting down to a 10am local deadline. However, in typical fashion, a last-minute reversal has seen Trump announce a two-week delay on any military action, contingent on the reopening of the Strait of Hormuz. Iran has accepted the 2-week ceasefire proposal.
Markets have reacted accordingly. Risk assets have pushed higher on the de-escalation narrative, while oil has seen a sharp unwind, dropping over 17% in a matter of hours as immediate supply fears ease.
Stormrake Spotlight: Pax Gold (PAXG) ($4,802)
Stormrake Spotlight: Pax Gold (PAXG) ($4,802)
