Global central banks' gold holdings exceed US debt for the first time in 30 years: Will Bitcoin be the next "digital gold" successor?

The global financial framework is undergoing a seismic shift in trust: the amount of gold held by foreign central banks has surpassed their holdings of U.S. Treasuries for the first time in 30 years. This milestone marks a significant change in the perspectives of major global economies regarding liquidity, safe assets, and trust. The central bank gold buying spree is expected to continue through 2025, with an estimated increase of about 900 tons for the year, more than double the long-term average for the fourth consecutive year. Analysts believe that the collapse of trust in U.S. debt and the liquidity crisis are driving forces behind the rise of gold, while Bitcoin (BTC), as 'digital gold,' is waiting for the moment of institutional fund rotation.

Gold Holdings Surpass US Debt: A Turning Point in the Global Financial Architecture

Since the mid-1990s, there has been a phenomenon in global financial history where the amount of gold held by foreign central banks has surpassed that of U.S. Treasury bonds for the first time. This silent shift from “paper assets” to “hard assets” is not just a simple market event; it marks a potential turning point in the architecture of the global financial system.

Central Bank purchases gold break records: hard asset status reshaped

Barchart's shared data confirms this crossover and points out that Central Banks continue their record gold-buying frenzy in 2025.

• Continuous Accumulation: According to data from the World Gold Council, after a net increase of 10 tons in July, the Central Bank net purchased 19 tons of gold in August, bringing the total gold purchases for the year to around 900 tons. This will be the fourth consecutive year that the global annual purchase amount exceeds twice the long-term average.
• Longest consecutive purchase period: The Kobeissi Letter points out that the Central Bank has continuously purchased gold for 16 years, which is the longest coherent period on record, breaking the net selling state that lasted more than twenty years before 2010. In the first half of 2025, a total of 23 countries/regions increased their gold reserves.

Macro researcher Sunil Reddy emphasized that the latest rise in gold is not solely driven by inflation, but is closely related to the collapse of the Federal Reserve's Reverse-Repo Balances — the reverse repo is a pool where excess Liquidity safely docks. When these balances nearly disappear, the price of gold “rises vertically.”

Trust Collapse: Gold Becomes the Ultimate Trust Asset

The core driving force behind this shift from paper assets to hard assets is the weakening global trust in U.S. debt and the fiat currency system.

The value return of hard currency: Bitcoin is poised for a pump

Amid the political deadlock and escalating debt, foreign confidence in US Treasury bonds is waning. Reports show that nearly 23 cents of every dollar the US government now earns goes towards paying interest.

Analysts point out that the value of gold has not changed; what has truly collapsed is the measure of gold (i.e., fiat currency). Since the 1970s, major currencies like the pound and Swiss franc have lost 70% to 90% of their value against gold.

Sunil Reddy summarized: “Capital is seeking assets that won't default—namely hard currencies. Gold is no longer just a tool for hedging against inflation; it is becoming the ultimate collateral—an asset of final trust.”

However, even the dominance of gold faces new challenges: digital gold. Crypto investor Lark Davis noted that last week, gold saw a single-day drop of 5% (the steepest decline since 2013), while Bitcoin (BTC) rose by 3% during the same period.

valuation rotation potential

Davis believes that if BTC absorbs even a small portion of the market value of gold, it could trigger a “crazy pump.” He estimates that absorbing 1% would be equivalent to $134,000, and absorbing 3% would be equivalent to $188,000.

Mister Crypto's viewpoint echoes this sentiment, suggesting that “digital gold will be the next target,” indicating that a rotation of funds is brewing. Although last week's pullback in gold seemed severe, insiders believe it was primarily mechanical: a large ETF block trade triggered algorithmic volatility alerts. Some analysts frankly stated, “Important participants did not sell off,” and even the Chinese gold ETF increased its exposure during the sell-off.

Conclusion

Guardians of global currency — the central banks of various countries, are decisively turning to hard assets. From selling off gold over the past few decades to now purchasing it at record levels each year, this trend not only defines the financial markets of the next decade but will also redefine currency itself. For ordinary investors, when those who control the printing presses are hoarding gold, we should focus not only on gold but also on its digital counterpart — Bitcoin. In an era where global trust faces structural challenges, the value of hard assets and the importance of digital scarcity are becoming more prominent than ever.