Your 60/40 Portfolio May Be 100% Exposed to a Dying Dollar, Bitwise Says
Investors simply moved a file $7 billion into gold and Bitcoin (BTC) funds in 5 days. Bitwise CIO Matt Hougan blames a flaw within the 60/40 portfolio, which is 100% uncovered to fiat foreign money.
Bloomberg senior ETF analyst Eric Balchunas calls it the debasement commerce, a wager on belongings no authorities can print. This week, that wager pushed AI funds out of the headlines.
Why the 60/40 Portfolio Is Suddenly Under Fire
SPDR Gold Shares (GLD) took in $3.4 billion within the week by way of August 21. BlackRock’s iShares Bitcoin Trust (IBIT) added simply over $1 billion, knowledge reveals.
Meanwhile, the VanEck Semiconductor ETF (SMH) bled $1.7 billion, greater than another fund. Money didn’t go away the market. It switched sides.
“DEBASER: Gold and Bitcoin ETFs have mixed for +$7b in flows in previous week, by far a file for a 5-day interval as debasement commerce steals highlight from AI. GLD, IBIT main, in Top 10 for week. Also notable $IBIT YTD flows are actually constructive, utterly dug out of sizable gap,” Balchunas shared.
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Hougan’s reply provided the speculation, indicating that a 60/40 portfolio holds 60% shares and 40% bonds. However, each halves are guarantees priced in {dollars}. Neither one protects traders if the greenback itself loses worth.
Investors have seen this weak spot earlier than. In 2022, shares and bonds crashed collectively, and the 60/40 combine lost about 18%. That was its worst yr since 1937.
Treasury Buybacks Reignite the Debasement Trade
The set off sits in Washington. US debt crossed $40 trillion on August 19. Days earlier, the 30-year Treasury yield hit 5.337%, its highest since 2007.
Treasury Secretary Scott Bessent answered by doubling long-bond buybacks to a minimum of $4 billion per operation, beginning September 9. Markets learn that as a plan to cap yields whereas deficits keep huge. That studying hurts the greenback and helps scarce belongings.
The greenback is already paying the worth. The US Dollar Index fell to a three-month low close to 98.8 on August 21. Meanwhile, the euro touched $1.1711, its strongest stage since mid-May.
Central banks made this change first. By late 2025, gold reached 27% of their reserves and overtook US Treasuries at 22%, European Central Bank figures present. The world’s most conservative traders have already made room for exhausting belongings.
Not everybody buys the pairing, nonetheless. Robin Brooks, senior fellow on the Brookings Institution, agrees the buybacks imply extra greenback weak spot forward. Yet he attracts a exhausting line between the 2 hedges.
“I’d keep effectively away from bitcoin. Markets don’t see it in the identical gentle as gold and silver. It positively isn’t a protected haven,” Brooks wrote this on August 21, arguing this part of the commerce belongs to valuable metals.
Bitcoin now trades close to $78,046, up 0.55% in 24 hours. Gold’s important ETF is up about 8% in 2026 after a weak summer season. IBIT, in distinction, continues to be down roughly 10% this yr.
The comeback is younger, too. IBIT was nursing a 33% loss as lately as June. Then daily Bitcoin ETF inflows hit $606 million on August 20, the largest single day since May 1.
The first expanded buyback lands on September 9. If the hard-asset flows proceed previous that date, traders are really rebuilding their portfolios. If they cease, this was one loud week within the bond market.
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