Central banks, particularly China, may be shifting away from US Treasuries in favor of alternative assets like gold and Bitcoin, according to Jay Jacobs, head of themes and active ETFs at BlackRock.
Geopolitical tensions and rising global uncertainty are driving central banks to diversify their reserve portfolios, and this trend is expected to continue in the coming years.
- China, in particular, is seen as a major player in this shift, with its central bank investing heavily in gold and Bitcoin.
- BlackRock’s identification of geopolitical fragmentation as a mega force for global markets has highlighted the growing demand for uncorrelated assets.
- Bitcoin is being viewed alongside gold as a safe-haven asset, with significant inflows into gold ETFs and Bitcoin.
| Asset | BlackRock’s Inflows |
|---|---|
| Gold ETFs | Significant inflows |
| Bitcoin | Significant inflows |
“The whole diversification away from traditional assets and into things like gold and also crypto […] probably began three, four years ago,” Jacobs explained.
He pointed to growing concerns about the freezing of $300 billion in Russian central bank assets following its invasion of Ukraine, suggesting that such events have prompted countries like China to rethink their reserve strategies.
“Geopolitical fragmentation is a mega force that is driving the world forward over the next several decades,” Jacobs said.
He noted that this environment is fueling demand for uncorrelated assets, with Bitcoin increasingly viewed alongside gold as a safe-haven asset.
“We’ve seen significant inflows into gold ETFs. We’ve seen significant inflows into Bitcoin. And this is all because people are looking for those assets that will behave differently,” Jacobs said.
Investors highlight Bitcoin’s declining correlation with US equities.
“Bitcoin is becoming less Nasdaq — more gold,” said Alex Svanevik, co-founder and CEO of the Nansen crypto intelligence platform.
He added that Bitcoin was “surprisingly resilient” amid the trade war compared to altcoins and indexes like the S&P 500, but remains vulnerable to economic recession concerns.
“With equities finishing last week in the red and extending an April drawdown, the narrative of BTC as a safe haven or inflation hedge is once again gaining traction. Should this dynamic hold, it could provide a fresh tailwind for institutional BTC allocation,” said QCP Capital in a Telegram note.
Bitcoin’s price is showcasing its growing maturity as a global asset, becoming “less Nasdaq — more gold,” according to Svanevik.
Gold is being viewed as a safe-haven asset in a world of rising global uncertainty, with significant inflows into gold ETFs.
Bitcoin’s decoupling from the US stock market is also noteworthy, with several analysts observing that it is becoming less correlated with US equities.
“Bitcoin is less correlated with the US stock market than ever before,” said Alex Svanevik.
This is a positive sign for Bitcoin, as it suggests that the cryptocurrency is becoming more of a global asset, rather than just being tied to the US market.
Bitcoin’s growing maturity as a global asset is also evident in its price movements, which are becoming less volatile and more predictable.
“The price of Bitcoin is becoming less volatile and more predictable, which is a sign of its growing maturity as a global asset,” said Alex Svanevik.
Why Geopolitical Fragmentation is Driving the Shift
Geopolitical fragmentation is driving the shift away from traditional assets like US Treasuries, according to Jacobs.
The freezing of $300 billion in Russian central bank assets following its invasion of Ukraine is a prime example of this.
This event has prompted countries like China to rethink their reserve strategies, leading to a shift away from US Treasuries and towards alternative assets like gold and Bitcoin.
“This whole diversification away from traditional assets and into things like gold and also crypto […] probably began three, four years ago,” Jacobs explained.
Bitcoin as a Safe Haven
Bitcoin is being viewed as a safe-haven asset in a world of rising global uncertainty, with significant inflows into gold ETFs and Bitcoin.
Bitcoin’s price movements are becoming less volatile and more predictable, which is a sign of its growing maturity as a global asset.
“With equities finishing last week in the red and extending an April drawdown, the narrative of BTC as a safe haven or inflation hedge is once again gaining traction.
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