I Like This Cryptocurrency ETF
Last week, I discussed the fourth straight weekly decline in the S&P 500, and the market bounced.
A Look at the Market
The moves this week after the big drop last week was a bounce followed by a partial retreat. TThe S&P 500 has returned 11.5% with dividends included, and the price is up 10.6% 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 right over 13%. At the same time, iShares Core US Aggregate Bond ETF (AGG) has declined in price in 2026. With dividends included, the return has been -1.5%, which is well below cash.
Earlier this year, Btcoin plunged, and I liked it then, adding a position in IBIT to the ETF model portfolio and exiting it at a profit. The model portfolio is benchmarked against an index that includes the S&P 500 and the Aggregate Bond Index, neither of which holds Bitcoin.
Bitcoin is the largest cryptocurrency, but it is not the only one. Ethereum, which is not limited in size like Bitcoin and is based on the blockchain, is the second largest. Unlike Bitcoin, Ethereum can generate income through staking, and its size has advanced slowly but has set a new record recently.
Like IBIT for Bitcoin, iShares offers a large Ethereum ETF, ETHA, and I started following it closely this week and did a lot of research into it. It is a large ETF that is liquid. Here is how it has performed relative to IBIT this year:
The performed similarly to begin the year and were very close in Late September when Bitcoin almost was unchanged year-to-date, but ETHA has had a very tough quarter-to-date. Both are still above their lows in late Q2. Looking at the action since the presidential election in 2024, Bitcoin is down slightly, and Ethereum is down more:
IBIT launched in early 2024, and ETHA launched in July that year. Looking at the action for Bitcoin and Ethereum since the end of 2019 (ahead of the pandemic), Ethereum has done better:
If one goes back a bit, Ethereum has far outpaced Bitcoin. More importantly, I expect that it will recover some of this recent underperformance and do better going forward. Why? Ethereum is not an ecological strain like Bitcoin is, and staking creates an incentive for investors. I have a lot of concerns about leveraged holders of Bitcoin, and I am unaware of anyone making big bets on leverage with Ethereum. Bitcoin is trading down 43% from its 2025 all-time high, while Ethereum is down 58%. So, I have added ETHA to the group of passive ETFs that I follow closely that now totas 91.
ETF Model Portfolio Update
This ETF model portfolio, which is measured against 60% SPY and 40% AGG, is up nicely year-to-date relative to its benchmark. This week, I did a few trades that were published here. For those who would like real-time alerts (free of charge for now), just subscribe to the blog.
I haven't written any ETF articles on this blog or on TalkMarkets recently, but I did share this at Medium:
Going into the week, my model portfolio equity exposure totaled 48.1%, spread out across three ETFs. Here is what I did this week:
Monday: I exited Vanguard Morningstar Small-Cap Value ETF (VBR) and added to the Vanguard Short-Term Inflation-Protected Index ETF (VTIP)
Tuesday: I reduced VTIP and ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) and added to LTPZ.
Thursday: I reduced VTIP and added iShares TIPS Bond ETF (TIP).
Here is the current model portfolio, which now has 41.3% equity exposure in two ETFs and fixed income exposure in three TIPS ETFs that total 58.5%, with cash at about zero:
After starting strong, the model portfolio had a rough Q3, but it is now back on track. The S&P 500 posted an all-time high in early October, but it looks like a double-top to me. The Russell 2000 posted an all-time high in mid-August but has pulled back more than 10% from that high, though it is bouncing now. Being underweight stocks all year, my return relative to the 60/40 index is higher again after going negative in early October. It is currently about +4.5% over 10+ months. This was a reversal from the prior several weeks of outperformance with over 1.7% underperformance. As the S&P 500 rallied and the Aggregate Bond Index fell, the model portfolio, which was a bit lower, underperformed the index.
The early year-to-date strong relative performance was not due to superior returns on the equity ETFs. My TIPS ETFs have done reasonably okay relative to AGG, at least until very recently, but they aren't exactly boosting the return. I have had positive returns from three ETFs, two of which I no longer hold and one of which was down a lot year-to-date but rallied while I held it, and there has been some good trading that has helped me with a bad overall asset allocation weighting.
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.
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