📕$7.5 trillion leverage: How Asian capital holds the fate of the U.S. bond market

Over the past quarter-century, Asian economies have funneled $7.5 trillion into U.S. financial markets, accumulating record exposure to American bonds and equities. Following the 1997 Asian financial crisis, countries across the region adopted a defensive strategy—stockpiling U.S. assets to stabilize currencies and hedge against volatility. Today, Japan and China lead with $1.8T and $1.1T respectively, followed by Taiwan ($650B), Hong Kong ($470B), South Korea ($340B), and Singapore ($320B).

While China is scaling back its holdings and moving into gold and yuan-based assets, the rest of Asia is filling the void. Japan, in particular, is doubling down. But this growing reliance on Japanese capital raises systemic risks: with Japan’s debt-to-GDP ratio exceeding 260% and demographic headwinds mounting, any internal shock—like a failed yield curve control or pension fund selloff—could trigger a cascade of asset liquidation abroad.

Such an unwinding would drive U.S. Treasury yields higher, pressure the dollar, and destabilize global credit markets. Crypto markets, which often move counter to fiat system stress, could see intensified inflows in a flight-to-alternatives scenario.

Is America’s financial strength now dependent on Asia—and can crypto be the hedge when that dependency cracks?#AMAGE