Your 60/40 Portfolio May Be 100% Exposed to a Dying Dollar, Bitwise Says

Investors just moved a record $7 billion into gold and Bitcoin (BTC) funds in five days. Bitwise CIO Matt Hougan blames a flaw in the 60/40 portfolio, which is 100% exposed to fiat currency.

Bloomberg senior ETF analyst Eric Balchunas calls it the debasement trade, a bet on assets no government can print. This week, that bet 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 in the week through August 21. BlackRock’s iShares Bitcoin Trust (IBIT) added just over $1 billion, data shows.

BlackRock’s iShares Bitcoin Trust (IBIT) ETF Flows in the Week Through August 21. Source: SoSoValue

Meanwhile, the VanEck Semiconductor ETF (SMH) bled $1.7 billion, more than any other fund. Money did not leave the market. It switched sides.

“DEBASER: Gold and Bitcoin ETFs have combined for +$7b in flows in past week, by far a record for a 5-day period as debasement trade steals spotlight from AI. GLD, IBIT leading, in Top 10 for week. Also notable $IBIT YTD flows are now positive, completely dug out of sizable hole,” Balchunas shared.

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Hougan’s reply supplied the theory, indicating that a 60/40 portfolio holds 60% stocks and 40% bonds. However, both halves are promises priced in dollars. Neither one protects investors if the dollar itself loses value.

The reason is simple: A 60/40 portfolio is 100% exposed to fiat currency. With everything going on, people have decided they want a little diversification. Prudent imo. https://t.co/TM1Y4ffUgL

— Matt Hougan (@Matt_Hougan) August 26, 2026

Investors have seen this weakness before. In 2022, stocks and bonds crashed together, and the 60/40 mix lost about 18%. That was its worst year since 1937.

Data source: bilello.blog and nyu.edu.

Treasury Buybacks Reignite the Debasement Trade

The trigger 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 at least $4 billion per operation, starting September 9. Markets read that as a plan to cap yields while deficits stay wide. That reading hurts the dollar and helps scarce assets.

The dollar is already paying the price. The US Dollar Index fell to a three-month low near 98.8 on August 21. Meanwhile, the euro touched $1.1711, its strongest level since mid-May.

DXY and EUR/USD Performance. Source: TradingView

Central banks made this switch first. By late 2025, gold reached 27% of their reserves and overtook US Treasuries at 22%, European Central Bank figures show. The world’s most conservative investors have already made room for hard assets.

Not everyone buys the pairing, however. Robin Brooks, senior fellow at the Brookings Institution, agrees the buybacks mean more dollar weakness ahead. Yet he draws a hard line between the two hedges.

“I’d stay well clear of bitcoin. Markets don’t see it in the same light as gold and silver. It definitely isn’t a safe haven,” Brooks wrote this on August 21, arguing this phase of the trade belongs to precious metals.

Bitcoin now trades near $78,046, up 0.55% in 24 hours. Gold’s main ETF is up about 8% in 2026 after a weak summer. IBIT, in contrast, is still down roughly 10% this year.

Bitcoin (BTC), SPDR Gold Shares (GLD), and BlackRock’s iShares Bitcoin Trust (IBIT) Performance. Source: TradingView

The comeback is young, too. IBIT was nursing a 33% loss as recently as June. Then daily Bitcoin ETF inflows hit $606 million on August 20, the biggest single day since May 1.

The first expanded buyback lands on September 9. If the hard-asset flows continue past that date, investors are truly rebuilding their portfolios. If they stop, this was one loud week in the bond market.