What if China dumped its US Treasury holdings as a weapon?
If China weaponizes its Treasury stock, the long end sells hardest (30y > 10y) on fading reserve demand, the dollar softens, and gold/Bitcoin bid as non-sovereign reserve hedges — the cleanest single chain is bear-steepener plus weaker DXY. The template is the Feb-2022 reserve freeze and the 1971 Nixon shock, both reserve-confidence regime breaks. Skeptic's note: China selling tanks the value of its own remaining holdings and pushes CNY up against its export interest, so a full dump is self-limiting — fade the most extreme yield overshoot.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. China weaponizes its Treasury holdings, selling aggressively into the market. The trigger decomposes into signed root‑shocks — Dollar/reserve confidence ▼ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▲ +4.3% hist -0.62–+3.58% |
| 2 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +2.7% hist +0.08–+3.46% |
| 3 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▲ +2.4% hist +0.25–+2.31% |
| 4 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▲ +1.7% hist -2.84–+4.08% |
| 5 | US dollar (DXY) DXYon Hyperliquid 📈 chart | FX | ▼ -1.4% hist -1.28–-0.25% |
| 6 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▲ +1.4% hist -3.88–+5.39% |
| 7 | EUR/USD EURUSDon Hyperliquid 📈 chart | FX | ▲ +1.3% hist +0.37–+1.11% |
| 8 | 30y Treasury yield DGS30 📈 chart | Rate | ▲ +10bp hist +1.34–+9.91% |
| 9 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▲ +0.9% hist -0.55–+0.88% |
| 10 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▲ +0.9% model prior · unmeasured |
| 11 | GBP/USD GBPUSDon Hyperliquid 📈 chart | FX | ▲ +1.0% hist +0.21–+0.78% |
| 12 | 10y Treasury yield DGS10 📈 chart | Rate | ▲ +8bp hist +2.62–+6.29% |
| 13 | Turkish lira TRY 📈 chart | FX | ▲ +1.0% hist -1.93–+0.7% |
| 14 | Indian rupee INR 📈 chart | FX | ▲ +0.8% hist -0.1–+0.8% |
Probable recommendation
Why we may diverge from history
History wins on SPX: a clean n=11, 0.93-hit-rate +5.4% off 2025 tariff-shock-then-rally analogues shows policy puts reverse the selloff; the cascade's SHORT over-reaches against a recent on-channel base rate.
Historical precedent — what analogous events actually did
Across 35 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| TRY TRY | SHORT | -2.0% · 5d -0.1% | 81% | 16 | 0.50 | ⚠ differs |
| GBPUSD GBPUSD | LONG | +0.2% · 5d +0.1% | 69% | 16 | 0.30 | ✓ matches cascade |
| ETH ETH | SHORT | -1.0% · 5d -5.6% | 67% | 15 | 0.28 | ⚠ differs |
| CNY CNY | SHORT | -0.5% · 5d -0.2% | 62% | 16 | 0.24 | ⚠ differs |
| SPX SPX | LONG | +0.2% · 5d +0.1% | 63% | 30 | 0.23 | ⚠ differs |
| Gold XAU | LONG | +1.8% · 5d +0.4% | 62% | 16 | 0.22 | ✓ matches cascade |
| CL CL | SHORT | -1.1% · 5d -0.4% | 62% | 16 | 0.19 | ⚠ differs |
| COIN COIN | SHORT | -4.2% · 5d -1.9% | 60% | 10 | 0.15 | ⚠ differs |
| MSTR MSTR | SHORT | -2.5% · 5d -3.0% | 59% | 17 | 0.14 | ⚠ differs |
| 30y yield DGS30 | LONG | +4bp · 5d +6bp | 58% | 26 | 0.14 | ✓ matches cascade |
| US dollar DXY | SHORT | -0.5% · 5d -0.2% | 57% | 30 | 0.12 | ✓ matches cascade |
| KRW KRW | LONG | +0.7% · 5d +0.0% | 56% | 16 | 0.11 | ✓ matches cascade |
| EURUSD EURUSD | LONG | +0.3% · 5d +0.2% | 56% | 16 | 0.10 | ✓ matches cascade |
| INR INR | SHORT | -0.5% · 5d +0.0% ↺ fades | 56% | 16 | 0.10 | ⚠ differs |
Why this probability
Self-defeating reserve liquidation; near-unprecedented, very low base rate. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.