Paul Barron Warned China ‘Dumping Dollars’ Could Weigh On Crypto

China’s Treasury pullback sparked risk-off fears in crypto, as Fed rate cuts, tensions in Japan, and Ethereum buying shaped the outlook.

• Paul Barron said China's reduction of purchases of U.S. Treasuries could trigger a global risk-off move and pressure crypto in the short term.
• He warned that rising yields and tighter liquidity may push investors toward safer assets such as gold rather than Bitcoin and Ethereum.
• While Jeff Park argued Bitcoin performs well during geopolitical conflict, Barron disagreed, even as Tom Lee bet on a V-shaped recovery in Ethereum.

Crypto analyst Paul Barron warned this week that China's scaling back of purchases of U.S. Treasuries could trigger a global “risk-off” move and pressure cryptocurrencies in the short term.

Speaking on The Paul Barron Show, he said that “China has instructed banks to begin selling and limiting purchases of US government bonds,” referencing reports by The Kobeissi Letter. Barron warned that if China and other nations step back from U.S. debt, “this really puts a lot of pressure on the US, and it puts a lot of pressure on the Fed.” 

He added that the shift could make the week “very tough for risk assets,” noting that if China reduces demand for U.S. bonds, yields could rise and liquidity could tighten, pushing investors away from risk assets such as crypto.

Is Gold’s Surge A Warning For Crypto?

Barron said rising Treasury yields and tighter liquidity typically hurt speculative assets first. While gold demand in China has surged, consumer confidence has weakened. He cited rising gold demand and weak consumer data from China. 

Barron argued that “you’re going to see risk assets start to play into this,” hinting that crypto markets could face near-term downside if investors move their money into safer assets like gold.

Is Japan’s China Hawk Stance The Next Market Trigger?

He also pointed out Japan’s new right-wing prime minister, Sanae Takaichi, who campaigned on anti-illegal immigration and adopted a more hawkish stance toward China. “She’s a China hawk. That’s the big one,” Barron added, referencing market commentary.

The crypto analyst added that rising tensions in Asia could shift capital flows across the region. If investors become cautious about trade and diplomatic relations, they may shift capital into safer assets rather than equities or crypto. “That really for the region, will make for an interesting financial market as we go forward,” Barron said, suggesting that geopolitical friction could increase short-term volatility in risk assets.

Bitcoin As A ‘Wartime Hedge’

Baron also disagreed with investor Jeff Park’s “Wartime Bitcoin” thesis. While Park had argued that Bitcoin performs well during geopolitical fragmentation, Barron said, “Metals have proven to be the true hedge,” pointing to gold’s strength during the recent crypto volatility.

Bitcoin (BTC) traded at $66,944.02, down 2.9% in the past 24 hours. On Stocktwits, retail sentiment around Bitcoin remained in a ‘bearish’ zone, as chatter around the coin dropped from ‘extremely high’ to ‘high’ over the past day. In conclusion, Barron said a rebound is possible if liquidity improves, noting that Bitcoin often responds to easier monetary conditions, especially if the Federal Reserve moves toward rate cuts or renewed stimulus.

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