Bitcoin faces its biggest risk yet! U.S. Treasury sell-off sparks ‘Capital War’

One thing is clearly brewing beneath the U.S. financial system. For example, U.S. President Donald Trump’s sudden withdrawal of the ten% tariff on the European Union (EU) appears like greater than only a random transfer.

So, what tipped it off? As AMBCrypto famous, rising U.S. Treasury yields are starting to stress the bond market, one thing the U.S. authorities would somewhat keep away from, particularly as mid-year elections draw nearer.

That mentioned, whereas this will sound bullish on the floor, supported by Bitcoin [BTC] rebounding 1.20%, an actual breakout nonetheless appears far off. In spite of everything, the stress is barely simply starting, in what analysts are calling a “capital warfare.”

Europe’s de-dollarization push raises recent considerations

The U.S. Treasury market is going through an unprecedented shock. 

For years, Asian and European international locations have held U.S. Treasuries to earn yield, primarily offering capital that helps the U.S. fund its debt. Actually, European buyers alone hold almost $2 trillion value of those securities.

Nevertheless, that development is beginning to change. Currently, overseas buyers have begun offloading their Treasury holdings. For instance, Denmark’s U.S. Treasury publicity has dropped to $9 billion, the bottom degree in 14 years.

Supply: Bloomberg

Extra broadly, the sell-off is accelerating. In accordance with analysts, Europe dumped $150.2 billion value of U.S. Treasuries. In the meantime, China bought $105.8 billion, whereas India offloaded $56.2 billion, hitting multi-year highs.

Towards this setup, President Trump’s tariff withdrawal appears extra like a response to this stress because the sell-offs have pushed yields greater, with the 30-year yield leaping close to 5%, adopted by power throughout the curve.

Why does this matter? The U.S. debt burden is rising quick. About 26% of the $39 trillion federal debt is ready to mature within the next 12 months, and with yields climbing, refinancing is getting way more costly.

Notably, analysts are calling this a “capital war,” as overseas buyers step again from funding U.S. debt. For threat property, particularly Bitcoin, it seems buyers are already factoring within the long-term dangers of this battle.

Bitcoin reveals indicators of warning as investor confidence weakens

Macro volatility is constant to form investor sentiment. 

The current tariff withdrawal and President Trump’s “no hostile” stance on Greenland sparked a risk-on transfer, sending $50 billion into the market, round 60% of which flowed into Bitcoin, fueling “BTC-led” momentum.

That mentioned, Bitcoin’s Coinbase Premium Index (CPI) stays at -0.1, signaling that U.S. buyers are nonetheless cautious. Actually, the index has been within the crimson because the October crash, suggesting confidence hasn’t returned.

Supply: CryptoQuant

Traditionally, Bitcoin’s bull runs have lined up with the CPI topping out, making it a key indicator. Proper now, it reveals a BTC bull run isn’t priced in but. Naturally, the query is, what’s conserving U.S. buyers cautious?

That’s the place the current Treasury sell-off is available in. With metals rallying collectively and overseas buyers stepping again from U.S. debt, these “coordinated” strikes are displaying the stress constructing below the financial system.

For buyers, it’s an indication to remain on the sidelines whereas high-yielding bonds look extra engaging. Because of this, capital flowing into Bitcoin might be restricted, conserving its momentum in examine till broader confidence returns.

Bullish gold predictions are set to form Bitcoin’s trajectory

We’re not even a month into 2026, and investor preferences are clear. 

With the U.S. deficit below stress and the continued Treasury sell-off, metals like Gold are hitting document highs (up 12% thus far) with a near-term goal round $5,000/oz, as buyers search safety in opposition to rising yields.

For Bitcoin, this rotation has already pushed the BTC/Gold ratio to a two-year low, falling beneath 18 ounces of gold for the primary time since late This autumn 2023, highlighting how capital is shifting towards safe-haven property.

Supply: Longtermtrends

That mentioned, analysts see this as simply the beginning. 

For instance, Goldman Sachs has “raised” its year-end gold forecast to $5,400 an oz, citing rising demand. Working example: Since invading Ukraine, Russia has gained greater than $216 billion from rising gold costs.

In the meantime, India’s silver imports have jumped to a document $5.9 billion over the previous 4 months. In brief, international locations are stockpiling metals, a transfer that traces up with their ongoing sell-off of U.S. Treasuries.

Technically, this places the Bitcoin/Gold ratio liable to a deeper breakdown, as macro stress continues to weigh on sentiment and drives capital from threat property into protected havens, limiting BTC’s breakout potential.

On this setup, conserving a detailed eye on the U.S. Treasury yields is essential.

Last Ideas

• Rising Treasury yields and ongoing sell-offs by Europe, China, and India are driving macro stress, pushing buyers towards safe-haven property.
• The shift is capping Bitcoin’s breakout potential, with the BTC/Gold ratio in danger and Treasury yields rising as a key metric to look at.