Treasuries, Bitcoin, and the Peculiar Fragility of Trust

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The curious business of ‘safety’ in finance—a term so casually bandied about—demands a certain degree of skeptical scrutiny. One begins to suspect it’s less a property inherent in an asset, and more a collective, momentarily shared delusion. Consider, if you will, the U.S. Treasury, that pale rectangle of paper upon which so much global faith rests. A rather flimsy foundation, when examined with a discerning eye, wouldn’t you agree?

Should the usual suspects—those large, somewhat melancholic holders of American debt in, say, the European Union—decide to redistribute their affections, to subtly loosen their grip on these promises of future dollars, then Bitcoin, that digital phantom, might flutter into the conversation. Not as a solution, mind you—the world is rarely so accommodating—but as a potential beneficiary of disillusionment. Though, as with most things, a less flattering first response is, statistically speaking, the more probable outcome. Let us, therefore, dissect the likely choreography of a genuine Treasury unwind.

The Liquidity of Disenchantment

Before we descend into the particulars of cryptographic curiosities, a brief stage-setting is in order. U.S. Treasuries, those elegantly printed slips of obligation, are the keystone of global pricing. The market is vast—nearly $30 trillion in outstanding debt—and its liquidity is monitored with the anxious vigilance usually reserved for particularly delicate orchids. Disruptions, however minor, tend to ripple outwards, disturbing the placid surface of other markets. A rather predictable consequence, wouldn’t you say?

Foreign investors currently possess approximately $9.4 trillion of these promises—a substantial, though not overwhelming, 31% of the total. A considerable weight, suspended, as it were, by threads of confidence. One wonders how much pressure those threads can bear.

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Should irritation—or, more prosaically, a lack of faith in the American economic or political trajectory—prompt a swift acceleration of selling, the immediate consequence will likely be a collective retreat towards perceived safety. Investors, those skittish creatures, will scramble to shed higher-risk assets, seeking refuge in the predictably dull embrace of less volatile options. And what, then, of Bitcoin?

A Digital Shimmer, First a Plunge

The bullish narrative, of course, is appealingly simple. Some investors, weary of national allegiances, might seek an asset beyond the reach of any single government. Bitcoin, with its deliberately decentralized structure, could theoretically benefit from this yearning for autonomy. Capital, diverted from the familiar channels of fiat currency, might flow into this digital wilderness. A charming notion, though one that presupposes a level of rational behavior rarely observed in financial markets. The channeling process, should it occur, will likely be protracted and rather ungainly.

The more probable scenario, alas, is considerably less flattering. Bitcoin’s correlation with the U.S. stock market—a rather inconvenient truth—has a tendency to spike during times of crisis. Thus, the most likely immediate consequence of a genuine Treasury sell-off is a sharp, rather undignified plunge in Bitcoin’s value. A prolonged recovery, one suspects, would be required to regain lost ground. A rather predictable outcome, when one considers the prevailing currents of investor psychology.

Over a longer horizon—perhaps a couple of years, allowing for the inevitable oscillations of the market—Bitcoin could still benefit from a sustained diversification away from the U.S. dollar. But such a scenario presupposes a degree of global cooperation and foresight rarely observed in the annals of finance. In closing, therefore, consider this risk with the seriousness it deserves. It won’t be pretty, but for those with a taste for the macabre—and a willingness to ‘buy the blood,’ as I intend to do—it might, eventually, prove profitable. A rather cynical perspective, perhaps, but one grounded in the cold, hard logic of the market.

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2026-01-23 13:03