Gold Surges to Historic Highs as Central Banks Shift from US Treasuries and Dollar Weakens, Stirring Crypto Market Implications

Global central banks are accelerating a major shift in reserve allocations, decreasing their holdings of US Treasuries to a 22-year low of 23% and raising gold reserves to 18%, a high not seen in 26 years. This move is spurred by a weakening US Dollar Index, which has dropped nearly 10% amid escalating trade tensions and global economic uncertainty. Gold has outperformed the S&P 500 since 2020, surging 109%, driven by historic inflows into gold funds and robust central bank purchasing. Amid these macroeconomic shifts, private investors continue to support US bond demand even as official foreign participation drops. Historically, similar moves toward de-dollarization and safe-haven assets like gold have coincided with bullish trends for Bitcoin, which previously rallied sharply when gold reserves grew and Treasury inflows shifted. However, analysts caution that a global recession could prompt a move into more liquid traditional assets, temporarily limiting upside for cryptocurrencies. The report also notes that recent crypto price moves have been led by institutions rather than retail investors, indicating changing market dynamics. For crypto traders, these developments signal a heightened environment of risk aversion and portfolio rebalancing that may benefit digital assets, but ongoing macro risks could affect market direction.