China May Shift from U.S. Treasuries to Gold and Bitcoin

This statement was made by Jay Jacobs, head of thematic and active ETFs at BlackRock, in a recent interview with CNBC. Jacobs said geopolitical tensions and growing global uncertainty are accelerating diversification strategies among central banks in different countries. He pointed to a long-term trend in which nations are reducing their reliance on dollar reserves in favor of assets such as gold and, increasingly, bitcoin. ”This whole diversification away from traditional assets towards gold and cryptocurrencies [...] started three to four years ago,” Jacobs explained, adding that the recent fragmentation of the world has increased the desire for alternative means of saving. The BlackRock representative mentioned growing concerns about the freezing in the West of $300 billion in assets of the Russian central bank. In his view, such events have forced countries such as China to rethink their reserve strategies. Geopolitical fragmentation as a defining force During the interview, Jacobs said that BlackRock has identified multipolarity as a key force that will influence global markets over the next few decades: ”We've really identified geopolitical fragmentation as a key force that will be a global driver over the next few decades.” He noted that this environment is fueling demand for non-correlated stock market assets, with bitcoin increasingly seen alongside gold as a safe haven asset. ”We've seen significant inflows into gold ETFs, we've seen significant inflows into bitcoin. And it's all because people are looking for assets with independent market behavior,” Jacobs said. Bitcoin is separating from the stock market Notably, Jacobs is not the only one to emphasize bitcoin's declining correlation with U.S. stocks. Several analysts have also noted that the first cryptocurrency is starting to separate from the US stock market. On April 22, Alex Svanevik, co-founder and CEO of crypto platform Nansen, stated that the bitcoin price is showing growing maturity as a global asset, becoming ”less Nasdaq and more like gold.” He added that bitcoin has proven ”remarkably resilient” in the face of the trade war compared to altcoins and indices like the S&P 500, although it remains vulnerable to economic recession fears. Echoing that view, QCP Capital in an April 21 report shared gold's fame as a hedge against macroeconomic uncertainty. ”With stock markets ending last week in the red, continuing April's decline, the narrative of bitcoin as a protective asset or inflation hedging tool is gaining traction again. If this momentum continues, it could provide further impetus for institutional bitcoin investment,” summarizes QCP Capital.