As the Greenland situation heats up, investors are watching Europe's massive US Treasury reserves like hawks. Could Brussels use its bond holdings as a geopolitical weapon? Toby Gibb, investment strategist at Artemis Investment Management, thinks that scenario is overblown.

Here's the reality: Europe holds substantial Treasury reserves, and yes, technically they could dump them on the market. But the actual leverage? Way weaker than headlines suggest. Why? Because selling Treasuries hurts Europe just as much—maybe more. Their own financial stability depends on stable USD markets and bond prices. A panic sale would crater values and destabilize the euro zone.

It's the classic deterrent problem. When both sides have nuclear weapons, nobody uses them. Same logic with Treasury reserves. The threat exists on paper, but executing it destroys your own position.

For traders: keep monitoring geopolitical noise, but don't overestimate how Treasury holdings actually shift market dynamics. Institutional players know the real levers of power rarely get pulled.