macro

Billionaire and founder of Bridgewater Ray Dalio believes that we are not living in a 'unique chaos', but in a recurring historical phase.
According to his model, the monetary, political, and geopolitical orders are breaking down simultaneously.
And this is not a conspiracy theory, but a pattern of large cycles.

💰 The monetary system is under pressure

According to Wintermute, the crypto market is experiencing one of the most challenging periods since 2022.
➠ Bitcoin fell below $80k, and at one point reached $60k.
The entire growth after Donald Trump's election in November 2024 is completely erased.
➠ Over the weekend, positions worth $2.7 billion were liquidated — the market cleared itself of excess leverage.

💡Interest on U.S. federal debt already consumes about 19% of all government revenues.
To put it simply: every fifth dollar of taxes goes not to the economy, not to social spending, but only to debt servicing.
What is happening now?🤷🏻‍♂️
Over the past 12 months, interest expenses have reached $1.2 trillion.

$BTC $ETH $SOL

Former President Trump says picking Jerome Powell as Fed Chair was a mistake and claims Kevin Warsh would have driven stronger economic growth.

🚀Why markets care:
• Fed leadership = liquidity + rate direction
• Policy style = restraint vs growth push
• Future expectations can move assets early
• Impacts stocks, bonds, and crypto sentiment

🔥Key takeaway:
Central bank philosophy matters more than headlines. A growth-leaning Fed narrative = higher risk appetite across markets.

#Macro #FederalReserve #markets #bitcoin #CryptoSentiment

China’s gradual retreat from U.S. government bonds is no longer a quiet background trend — it is increasingly being interpreted as a visible risk-management signal. And the Bitcoin market is watching closely, waiting to see which domino might fall next.
The latest catalyst emerged on February 9, when Bloomberg reported that Chinese regulators had advised commercial banks to limit exposure to U.S. Treasuries, citing rising concentration risk and growing volatility. While the guidance stops short of mandating sales, it has reignited concerns over the scale — and opacity — of China’s U.S. dollar–denominated debt holdings.
According to China’s State Administration of Foreign Exchange (SAFE), Chinese banks held approximately $298 billion in USD-denominated bonds as of September. However, a key source of uncertainty remains: no public data clearly distinguishes how much of this figure consists of U.S. Treasuries versus other USD debt instruments.
A Long-Term Shift, Not a One-Off Signal
This regulatory caution does not exist in isolation. It follows a year-long structural reduction in China’s exposure to U.S. Treasuries, a trend clearly visible in official data.
U.S. Treasury figures on Major Foreign Holders show that Mainland China’s Treasury holdings fell to $682.6 billion in November 2025, marking the lowest level in more than a decade. The pace of reduction has accelerated over the past five years, reflecting Beijing’s broader strategy to reduce reliance on U.S. financial markets.
The big picture is becoming harder to ignore: marginal demand for U.S. Treasuries from the East is weakening, both at the commercial and sovereign level.
Why Bitcoin Cares About U.S. Treasury Yields
The risk to Bitcoin is not that China could single-handedly destabilize the U.S. Treasury market. With $28.86 trillion in marketable U.S. debt outstanding, China’s $682.6 billion share represents only about 2.4% of the total.
The real risk is more subtle.
If declining foreign participation pushes yields higher through an increase in the term premium, financial conditions tighten — and high-beta assets like crypto are particularly sensitive to this channel.
On the day the news broke, the U.S. 10-year Treasury yield hovered around 4.23%. That level alone is not alarming. The concern lies in the trajectory, not the absolute number.
A slow, orderly repricing is manageable. But a disorderly rise driven by a “buyer strike” — where demand fails to absorb new issuance — could trigger simultaneous deleveraging across rates, equities, and crypto markets.
Research from the Kansas City Fed’s 2025 Economic Review suggests that even a one-standard-deviation liquidation by foreign investors could push Treasury yields 25–100 basis points higher. Crucially, yields can rise even without aggressive selling — a simple drop in demand at auctions may be enough.
In a more extreme scenario, a 2022 NBER study found that $100 billion in foreign selling could lift the 10-year yield by over 100 basis points almost immediately, before stabilizing. While not a base case, it underscores how liquidity shocks often overpower fundamentals in stressed conditions.
Real Yields and Financial Conditions: The Key Variable for Bitcoin
Since 2020, Bitcoin has largely traded as a macro-duration asset. In this framework, higher yields and tighter liquidity typically exert downward pressure on risk assets — even when the initial shock originates in bond markets.
This makes real yields the critical variable.
As of February 5, the U.S. 10-year TIPS yield stood near 1.89%, raising the opportunity cost of holding non-yielding assets like Bitcoin. That dynamic naturally favors defensive positioning during periods of tightening.
However, bearish narratives face a constraint: financial conditions have not yet signaled systemic stress. The Chicago Fed’s National Financial Conditions Index stood at -0.56 in the week ending January 30, indicating conditions remain looser than average.
The nuance lies here: markets can tighten meaningfully from a “comfortable” starting point without triggering a crisis. For crypto, this intermediate tightening phase has historically been sufficient to pressure Bitcoin — even without any immediate policy response from the Fed.
Recent price action reflects this sensitivity. Bitcoin dipped below $60,000 during last week’s risk-off episode, then rebounded above $70,000 as sentiment stabilized. By February 9, Bitcoin had recovered again, reinforcing its role as a high-beta proxy for global liquidity.
Four Scenarios Traders Are Monitoring: China, Yields, and Bitcoin
What matters most is not whether China sells — but how quickly the market absorbs any shift in supply and demand. Bitcoin’s reaction will depend on the degree of USD liquidity stress.
Scenario 1: Controlled De-Risking (Base Case)
Chinese banks gradually reduce exposure through maturities and reallocation, not forced selling.
U.S. yields rise 10–30 bps, mainly via term premium. Bitcoin faces mild headwinds, with price action driven more by U.S. macro data and Fed expectations.
Scenario 2: Aggressive Term Premium Repricing (Macro-Negative)
Markets interpret China’s actions as a structural decline in foreign demand.
Yields rise 25–100 bps, led by real rates. Financial conditions tighten enough to suppress risk appetite, weighing on crypto through higher funding costs and risk-parity deleveraging.
Scenario 3: Disorderly Liquidity Shock (Tail Risk)
A politically driven or crowded exit — even if not led by China — causes nonlinear volatility.
Bitcoin could experience sharp forced selling initially, followed by recovery if policymakers deploy liquidity tools. The “$100B stress episode” framework becomes relevant here.
Scenario 4: The Stablecoin Pivot (Underrated Factor)
Ironically, as China steps back, crypto capital steps forward.
According to DeFiLlama, total stablecoin market capitalization is around $307 billion. Tether alone reports holding $141 billion in U.S. Treasuries and related instruments, roughly one-fifth of China’s holdings, and claims to be among the top 10 Treasury buyers last year.
If stablecoin supply remains stable, crypto markets may indirectly self-fund Treasury demand, even as Bitcoin remains sensitive to broader financial tightening.
The Policy Backstop: When Rising Yields Turn Bullish for Bitcoin
The final pivot in the “higher yields = lower Bitcoin” relationship lies in market functionality.
If yields rise to levels that threaten Treasury market operations, the U.S. has intervention tools. IMF research shows that targeted bond-purchase programs can rapidly restore order in stressed segments.
This reflexivity underpins crypto traders’ longer-term thesis: severe Treasury stress often precedes liquidity support, turning Bitcoin’s initial sell-off into a potential recovery phase.
At present, China’s $682.6 billion figure is not a sell signal — it is a measure of fragility at the margin. It highlights how Treasury demand is becoming increasingly price-sensitive, and why Bitcoin remains one of the clearest real-time indicators distinguishing healthy repricing from the onset of a more dangerous tightening regime.
Disclaimer:
This article is for informational and educational purposes only and reflects personal market analysis. It does not constitute financial or investment advice. Cryptocurrency markets are highly volatile, and readers should conduct their own independent research before making any decisions. The author assumes no responsibility for any financial outcomes based on this content.
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