Something is clearly brewing beneath the U.S. economy. For instance, U.S. President Donald Trump’s sudden withdrawal of the 10% tariff on the European Union (EU) looks like more than just a random move.
So, what tipped it off? As AMBCrypto noted, rising U.S. Treasury yields are beginning to pressure the bond market, something the U.S. government would rather avoid, especially as mid-year elections draw closer.
That said, while this may sound bullish on the surface, supported by Bitcoin [BTC] rebounding 1.20%, a real breakout still seems far off. After all, the pressure is only just beginning, in what analysts are calling a “capital war.”
Europe’s de-dollarization push raises fresh concerns
The U.S. Treasury market is facing an unprecedented shock.
For years, Asian and European countries have held U.S. Treasuries to earn yield, essentially providing capital that helps the U.S. fund its debt. In fact, European investors alone hold nearly $2 trillion worth of these securities.
However, that trend is starting to change. Lately, foreign investors have begun offloading their Treasury holdings. For example, Denmark’s U.S. Treasury exposure has dropped to $9 billion, the lowest level in 14 years.
Source: Bloomberg
More broadly, the sell-off is accelerating. According to analysts, Europe dumped $150.2 billion worth of U.S. Treasuries. Meanwhile, China sold $105.8 billion, while India offloaded $56.2 billion, hitting multi-year highs.
Against this setup, President Trump’s tariff withdrawal looks more like a response to this pressure as the sell-offs have pushed yields higher, with the 30-year yield jumping near 5%, followed by strength across the curve.
Why does this matter? The U.S. debt burden is growing fast. About 26% of the $39 trillion federal debt is set to mature within the next 12 months, and with yields climbing, refinancing is getting much more expensive.
Notably, analysts are calling this a “capital war,” as foreign investors step back from funding U.S. debt. For risk assets, especially Bitcoin, it appears investors are already factoring in the long-term risks of this conflict.
Bitcoin shows signs of caution as investor confidence weakens
Macro volatility is continuing to shape investor sentiment.
The recent tariff withdrawal and President Trump’s “no hostile” stance on Greenland sparked a risk-on move, sending $50 billion into the market, around 60% of which flowed into Bitcoin, fueling “BTC-led” momentum.
That said, Bitcoin’s Coinbase Premium Index (CPI) remains at -0.1, signaling that U.S. investors are still cautious. In fact, the index has been in the red since the October crash, suggesting confidence hasn’t returned.
Source: CryptoQuant
Historically, Bitcoin’s bull runs have lined up with the CPI topping out, making it a key indicator. Right now, it shows a BTC bull run isn’t priced in yet. Naturally, the question is, what’s keeping U.S. investors cautious?
That’s where the recent Treasury sell-off comes in. With metals rallying together and foreign investors stepping back from U.S. debt, these “coordinated” moves are showing the stress building under the economy.
For investors, it’s a sign to stay on the sidelines while high-yielding bonds look more attractive. As a result, capital flowing into Bitcoin could be limited, keeping its momentum in check until broader confidence returns.
Bullish gold predictions are set to shape Bitcoin’s trajectory
We’re not even a month into 2026, and investor preferences are clear.
With the U.S. deficit under pressure and the ongoing Treasury sell-off, metals like Gold are hitting record highs (up 12% so far) with a near-term target around $5,000/oz, as investors seek protection against rising yields.
For Bitcoin, this rotation has already pushed the BTC/Gold ratio to a two-year low, falling below 18 ounces of gold for the first time since late Q4 2023, highlighting how capital is shifting toward safe-haven assets.
Source: Longtermtrends
That said, analysts see this as just the start.
For example, Goldman Sachs has “raised” its year-end gold forecast to $5,400 an ounce, citing growing demand. Case in point: Since invading Ukraine, Russia has gained more than $216 billion from rising gold prices.
Meanwhile, India’s silver imports have jumped to a record $5.9 billion over the past four months. In short, countries are stockpiling metals, a move that lines up with their ongoing sell-off of U.S. Treasuries.
Technically, this puts the Bitcoin/Gold ratio at risk of a deeper breakdown, as macro pressure continues to weigh on sentiment and drives capital from risk assets into safe havens, limiting BTC’s breakout potential.
In this setup, keeping a close eye on the U.S. Treasury yields is key.
Final Thoughts
- Rising Treasury yields and ongoing sell-offs by Europe, China, and India are driving macro stress, pushing investors toward safe-haven assets.
- The shift is capping Bitcoin’s breakout potential, with the BTC/Gold ratio at risk and Treasury yields emerging as a key metric to watch.
