BOE Unwinds £368 Billion in Gilt Sales by 2034

The Bank of England (BOE) has announced plans to unwind £368 billion worth of gilts, or government bonds, by September 2034. This decision aims to gradually reduce the central bank's balance sheet and normalize market conditions.

The BOE will sell £20 billion in annual active sales, combined with maturing bonds averaging £46 billion per year. The plan is a part of quantitative tightening (QT), which shifts bonds from a central bank's balance sheet toward private investors.

As a result, this could lead to higher yields for longer-dated debt and tighten financial conditions even if the policy rate remains unchanged. The BOE estimates that QT has already contributed 20-30 basis points of an approximately 200-basis-point rise in long-term gilt term premia since 2022.

Bitcoin's connection to this decision is through the broader rates and risk-appetite channel, with US monetary tightening previously found to depress a common crypto-market factor. However, the BOE's plan creates a long-run test: whether predictable central-bank withdrawal adds enough pressure to global yields and risk appetite to impact Bitcoin.