Bitcoin Bummer

The news was quite interesting this week, as Treasury Secretary Bessent boosted bond repurchases, sparking a rally for a day in Treasuries. The market fell this week for stocks. Last week, I discussed why I am not that interested in Fidelity ETFs.

A Look at the Market

The S&P 500 has returned 12.9% with dividends included, and the price is up 12.3% for SPDR S&P 500 ETF (SPY) in 2026 so far. This leaves the market on track to post a return for the full year below 20%. At the same time, iShares Core US Aggregate Bond ETF (AGG) has declined in price in 2026. With dividends included, the return has been -0.2%, which is well below cash.

The big story this week was the impact of potential dollar devaluation. First, there was a move to protect the Japanese currency early this month. Then, this week, the U.S. Department of the Treasury announced on August 19th that it would at least double the amount of longer-dated Treasury bonds from $2 billion to $4 billion between September 9th and November 4th. Some viewed this as quantitative easing by the Federal Reserve, though it really isn't. The move was made to "provide liquidity."

The timing of this announcement was quite interesting, as Treasury bonds have been jumping in yield. The day after this announcement, some bigger news came out: The U.S. debt soared to over $40 trillion. NPR posted an article about this and included a chart showing the growth since 1970:

Treasury yields did not change that much during the week, but precious metals sure did. Bitcoin did too. Here is what these four ETFs did this week:

iShares Bitcoin Trust ETF (IBIT) led the way, soaring 22.5%, but Van Eck Gold Miners ETF (GDX) posted a double-digit return as well. GDX, which has returned 38.8% so far in August, is up 19.9% year-to-date. SPDR Gold Shares (GLD) has returned 14.0% month-to-date, and it has returned 6.8% so far in 2026. Silver Trust ETF (SLV) has returned 19.8% in August, but its return so far in 2026 is -2.6%. IBIT has returned 22.6% in August, but its year-to-date return is -12.0%. It has enjoyed a big rally, but it is still not performing well compared to precious metals.

I have liked Bitcoin for the first time ever earlier this year, attracted by the plunge. Bitcoin is not part of the balanced index, but my position peaked earlier this year at about 10% of the model portfolio. I have written about why I liked it at the depressed price, and it had (and has) trailed precious metals badly over the past year:

So, I thought that perhaps it could benefit from the move away from the US Dollar, though the US Dollar hasn't really moved that much this year.

Perhaps Bitcoin will keep rising, though I don't expect it to do so. In my article six months ago, when I first called out IBIT, I pointed out that Seeking Alpha had a Strong Sell Quant Rating at the time. I can be a contrarian, and I thought this was a time to consider buying Bitcoin for a technical bounce. Seeking Alpha now rates it as a Buy in its Quant Rating! The score has been boosted by its momentum. Here is how the momentum grade is measured for IBIT:

Bitcoin is still down in 2026, but the longer-term trend is very positive. With that said, IBIT is up only 10.6% since the 2024 elections. I mentioned the government debt situation, but there were some other factors that helped boost Bitcoin so sharply this past week. Institutional demand increased according to many sources, and there was short-covering as well. Another factor is that the proposed Clarity Act to regulate cryptocurrencies is back on track. If the Clarity Act passes, Bitcoin's legal status as a digital commodity would be boosted and it would be outside of the SEC.

How IBIT does in the future seems to be supported by the rallying precious metals, and it could catch up to the big recent underperformance over the past year or two. It has spiked up a lot and could pull back, even if the Clarity Act advances. I exited IBIT on July 14th at $36.67 at a profit, but it is 19.1% higher now. This is why I use the word "bummer" in the title. It was the right idea, but I could have executed the trade so much better.

I do compare IBIT to two stocks, Strategy (MSTR) and Coinbase Global (COIN), both of which are very tied to Bitcoin, and my interest in IBIT relative to those two was positive in the past, as it had underperformed both. Here is the action since July 14th, when I exited IBIT:

MSTR, which is a leveraged Bitcoin investor, has gained more, but COIN, which is up, is up a lot less. Since the 2024 elections, IBIT is up, as I pointed out, but both of these other Bitcoin-related investments are down:

When I liked IBIT in February, it was down since the elections, and I thought it might bounce. It did, though further than I thought (and it took longer than I expected too). If I liked it here, I would invest in it at this higher price in my model portfolio, but I think it is at risk of pulling back. For momentum-chasers out there, consider COIN if you are positive on Bitcoin. For those concerned about the federal debt, I think TIPS make more sense than Bitcoin or precious metals.

ETF Model Portfolio Update

This ETF model portfolio, which is measured against 60% SPY and 40% AGG, is up relative to its benchmark. This week, I did one trade again, which was published on here instead of on my Seeking Alpha blog. For those who would like real-time alerts (free of charge for now), just subscribe to the blog.

I posted no articles on ETFs or stocks this week, though I wrote a lot about some things (not investment-related as well as about another scary AI investment management software company).

Going into the week, my model portfolio equity exposure totaled 26.0%, spread out across two ETFs. Here is what I did this week:

• Monday: I added to PIMCO 15+ Year US TIPS ETF (LTPZ) and to  iShares TIPS (TIP).

• Tuesday: I reduced ProShares S&P 500 Dividend Aristocrats ETF (NOBL).

• Wednesday: I exited NOBL and added a new position again in ProShares Russell 2000 Dividend Growers ETF (SMDV), and I also reduced LTPZ.

• Thursday: I trimmed Vanguard Short-Term Treasury Index ETF (VGSH) and added more SMDV

  
  

Here is the current model portfolio, which now has 29.2% equity exposure in two ETFs and fixed income exposure in four ETFs that totals 68.9%:

I have been wrong this year, at least so far, as stocks keep rallying. The rally had been until Friday nine weeks ago (June 5th), when stocks had their worst day of the year. Since then, the S&P 500 has made a new high. Small-caps did again make a new high this week too. Despite being underweight stocks all year, my return relative to the 60/40 index is higher by about 4.3% in almost eight months. As the S&P 500 fell this week and the Aggregate Bond Index fell slightly, the model portfolio fell less than the index during the week, declining 0.3%.

The year-to-date strong relative performance is not due to superior returns on my current equity ETFs. My TIPS ETFs have done okay relative to AGG, but they aren't exactly boosting the return. VGSH isn't helping too much either. So, what has it been? I have had positive returns from three ETFs, two of which I no longer hold and one of which is down a lot year-to-date that I just repurchased recently, and there has been some good trading.

How I Can Help You

I enjoy analyzing ETFs and stocks, and I like sharing my thinking in writing. I was considering starting a subscription service or joining one that is already being published. What things would you as an investor like to see offered?

If you are an investment professional, I would like to work with you as well. I can help educate financial consultants about the ETFs, and I can work with management at investment firms to help create model portfolios or potential ETF investments. Please let me know if your firm would be interested in this.

My ETF articles at Seeking Alpha, written under the alias The Intelligent ETF Investor, shared a lot of my ideas. I continue to share those ideas here on this blog.