US Treasurys Face $1.7 Trillion EU 'Dump' Over Greenland, Risking Shift to Bitcoin as Dollar Safety Fades

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Foreign investors are increasingly viewing U.S. Treasurys as a leverage point in the escalating U.S.-European dispute over Greenland. European leaders, facing tensions with Washington, may use Treasurys as a countermeasure, testing the market's capacity to absorb a potential sell-off.

The U.S. Treasury's TIC data shows foreign investors held $9.355 trillion in U.S. Treasurys at the end of November 2025, with $3.922 trillion attributed to foreign official holders. The European holdings, based on custody attribution, amount to approximately $1.733 trillion. This figure represents an upper bound and not a verified total of EU beneficial ownership.

European holders of U.S. Treasurys include Belgium ($481.0 billion), Luxembourg ($425.6 billion), France ($376.1 billion), Ireland ($340.3 billion), and Germany ($109.8 billion) according to TIC data. These amounts reflect custody attributions rather than EU ownership, which adds complexity to assessing the exact scale of a potential sell-off.

Why Did This Happen?

The Greenland dispute has intensified as U.S. President Donald Trump has threatened tariffs on European countries if Greenland is not made available for acquisition. European leaders responded by suspending the U.S.-EU trade deal ratification, raising concerns about geopolitical implications for global financial markets.

The Financial Times has highlighted Greenland as a potential flashpoint, with U.S. Treasurys on the menu of possible countermeasures. This framing focuses on execution mechanics and timing rather than a single large-scale sell-off.

How Did Markets React?

On January 20, 2026, global bond markets experienced a selloff triggered by U.S. President Donald Trump's tariff threats and the Greenland dispute. U.S. Treasury yields rose sharply, with the 10-year yield reaching 4.288% and the 2-year yield falling to 3.583%.

The selloff was also influenced by concerns over Japan's public finances and rising Japanese government bond yields. President Trump's speech at the World Economic Forum in Davos provided some relief, calming bond markets and reducing the immediate volatility.

What Are Analysts Watching Next?

Analysts are monitoring custody flows and TIC-reported totals for signs of sustained shifts in foreign holdings. The execution speed of any potential sell-off will determine its impact on yields and financial conditions.

A $250 billion sell-off could lead to a 100–150 basis point rise in 5-year Treasury rates if concentrated in a month. A $1.73 trillion sell-off, if executed quickly, could transmit a multi-quarter tightening impulse.

Bitcoin and crypto markets could be affected through discount rate and liquidity dynamics. A fast Treasury liquidation that lifts intermediate yields could raise the global discount rate and tighten leverage conditions for BTC and ETH positioning.

The dollar's role as a reserve currency remains resilient due to network effects. However, sustained politicization of U.S. government paper could gradually weaken structural dollar demand.

Market watchers are also tracking the European Parliament's decision on the U.S.-EU trade deal and the potential for retaliatory measures. The geopolitical implications of the Greenland dispute will continue to shape investor sentiment and market dynamics.

The U.S. economy faces challenges with a $38.6 trillion gross national debt, making it sensitive to marginal funding cost shifts. Any sustained rise in Treasury yields could tighten financial conditions through benchmark effects on mortgages and investment-grade issuance.