What if the US hits major Chinese banks with secondary sanctions?
Secondary sanctions threatening major Chinese banks' dollar-clearing is the genuine systemic tail here: a correspondent-banking and dollar-funding shock that bid Treasuries on flight-to-quality while Bitcoin gets a non-sovereign-reserve hedge bid - the cascade's bank-contagion framing is apt. Rhymes with the 2014 BNP Paribas $8.9bn settlement and broadly with Lehman-style funding freezes. China is the target; global correspondents and Russia-trade conduits transmit it. The forward angle is cutting a G-SIB-scale Chinese bank from dollars is unprecedented, so tail risk of weaponizing CIPS/yuan retaliation is the real second-order trade.
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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 (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. US sanctions major Chinese banks for processing Russian trade, threatening their dollar-clearing access and global correspondent links. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Dollar/reserve confidence ▲ · Trade tension ▲ — which propagate through our causal graph to the markets below.