Important signals emerge from China and the U.S.! China is dumping a large amount of U.S. Treasury bonds, and BTC is poised to become a "substitute" international currency.

The struggle between the two major economies of China and the United States is extending from trade and technology fields to the financial battlefield. China is indifferent to the threats and continues to sell off U.S. debt, risking angering the White House. This not only reflects the intensification of geopolitical tensions but also highlights concerns about the U.S. fiscal situation. At the same time, Bitcoin is poised to act, aiming to become an alternative international currency. Currently, foreign investors hold only 31% of U.S. debt, far lower than nearly 60% in 2008, and behind this data lies a profound change in the global monetary landscape.

Today (25th) in the Asian afternoon session, Bitcoin is currently around 115,650 USD, continuing to pull back from its historical high.

(Source: CoinMarketCap)

The Twilight of the Dollar? China Continues to Reduce Holdings of US Treasuries

The UK has surpassed China to become the world's second-largest holder of US public debt. The UK now holds $779 billion, partially replacing the BRICS countries that are currently reducing their holdings. China has fallen to third place, holding $765 billion. Japan remains the largest holder, with $1.113 trillion.

It is important to note that the increase in holdings in the UK does not stem from trade surpluses like that of Japan and China. London is a global financial center that provides intermediary services for many multinational companies, some of which are actually American firms. The situation is similar in the Cayman Islands, Luxembourg, Belgium, and Ireland, where the dollar reserves of these countries are completely decoupled from GDP.

China, on the other hand, is developing in the opposite direction. Its dollar reserves have continuously declined since peaking at 1.3 trillion dollars in 2013. China has clearly shifted towards gold and European bonds. Although China purchased 23 billion dollars of U.S. Treasury bonds in February, it is still not enough to offset the bonds it holds that are maturing.

Geopolitical Tensions and U.S. Fiscal Concerns

China's gradual exit reflects the escalating geopolitical tensions and concerns about the U.S. fiscal situation. It is projected that by 2025, tax revenue will reach $5.2 trillion, while expenditures will exceed $7 trillion. At the same time, the pressure facing the Federal Reserve Chairman is increasing, indicating that Republicans have chosen a shortcut. Donald Trump is undoubtedly considering a new quantitative easing policy (printing money).

In addition, China has noticed that the EU has frozen Russia's €300 billion foreign exchange reserves. How long will it take for the United States to take similar measures against China? This is the reason why the United States imposes tariffs on Ukraine and adds fuel to the fire, with the ultimate goal of preventing BRICS countries from de-dollarizing too quickly. The chart below indeed shows that foreign investors currently hold only 31% of U.S. debt, down from nearly 60% at the onset of the 2008 subprime crisis and the start of quantitative easing.

Brazilian President Lula da Silva recently launched a fierce criticism of Donald Trump regarding tariff issues, stating, "No foreigner will give orders to this president." He emphasized, "We are tired of being subjected to North Korea. […] We are discussing the possibility of creating our own currency, or perhaps using our own currency for trade without relying on the US dollar. […] I am not obligated to buy US dollars to trade with countries like Venezuela, Bolivia, Chile, Sweden, the EU, or China. We can use our own currency. Why should I be linked to a currency like the US dollar that I cannot control? The US prints dollars, not us." Lula's remarks reflect the dissatisfaction of many emerging countries with the dollar's hegemony and the desire for alternative solutions.

Why Not Use Bitcoin? The Dilemma of BRICS Countries and the Potential of Bitcoin

BRICS countries often talk about a new currency, but there are currently no specific measures in place. This currency is unlikely to ever materialize. For such a diverse economy and culture, replicating the European model would be extremely dangerous. This is indeed a problem. For example, Russia stopped accepting Indian rupees as a currency for oil trade settlement early last year. The reason is that India does not produce the products (high-tech, automobiles, machinery) that Russia needs, unlike China.

Part of the reason for this issue is that central banks around the world have accumulated a large amount of gold in recent years. In the long run, gold remains a universally accepted store of value currency. However, gold trading is not smooth, far from it. In contrast, Bitcoin can be relatively easily integrated into financial markets such as the St. Petersburg International Mercantile Exchange (SPIMEX). Today, trading volumes have become sufficiently large, and trading fees have been decreasing for years. Of course, Bitcoin is highly volatile, but the Lightning Network and stablecoins can mitigate this short-term exchange rate risk.

Bitcoin is stateless, cannot be "frozen", and has an absolutely limited supply, destined to become a top international currency. This is why the United States wants to accumulate wealth as much as possible before other countries in the world. This is to hedge against a currency that can enable equal trade among countries.

Strategic Considerations of the United States: Bitcoin and De-dollarization

Donald Trump knows that the United States will eventually have to give up excessive privileges to reduce the trade deficit. However, it is better to do it late than early, because re-industrialization cannot be achieved overnight. If other countries in the world allow them to accumulate enough Bitcoin to buffer against de-dollarization, then the United States may sheathe its sword and let us remain optimistic.

This shows that the United States' attitude towards Bitcoin may not only be regulatory but also a strategic layout. By actively participating in the Bitcoin market and even incorporating it into national strategic assets, the U.S. may be able to retain some influence for itself in the global trend of de-dollarization, or at least prepare for future changes in the currency landscape.

China's continuous selling of U.S. Treasury bonds, along with the calls from BRICS nations for de-dollarization, collectively pose a challenge to the dollar's hegemony. Against this backdrop, Bitcoin, as a stateless and censorship-resistant digital asset, increasingly demonstrates its potential as an alternative international currency. The evolution of U.S. policy towards Bitcoin also suggests a deeper consideration of the future monetary landscape. This global game surrounding monetary dominance is pushing Bitcoin to the center of the international financial stage.