Bitcoin and bonds. You couldn’t ask for a better example of divergence in this market!
Take a look at these two MoneyShow Charts of the Day. The first shows the iShares 20+ Year Treasury Bond ETF (TLT) and the second shows the iShares Bitcoin Trust (IBIT). It’s fairly obvious that the former is breaking OUT...while the latter is breaking DOWN. But what does that tell you to do as a trader?
Chart #1: iShares 20+ Year Treasury Bond ETF (TLT)
Chart #2: iShares Bitcoin Trust (IBIT)
Let’s talk about TLT first. The ETF is a proxy for long-term US Treasury bonds. How many stories have you read about ballooning US government deficits…foreign bondholders threatening to dump our debt...the potential for President Trump’s tariffs to drive inflation higher...and more? I’ve lost count myself.
Yet bond prices are going UP. And bond yields, which move in the opposite direction of bond prices, are going DOWN.
Then there’s the IBIT, one of several Bitcoin ETFs that hit the market in the last year or so. They attracted more inflows in less time than any other batch of ETFs in history. IBIT now sports $55.3 billion in net assets. Meanwhile, Trump has positioned himself as a strong proponent of cryptocurrencies. Many analysts have said his lighter regulatory touch will benefit the industry.
Yet Bitcoin itself just plunged through $90,000. Plus, IBIT has given up all its gains for the year – and then some.
My take? As a trader, you shouldn’t ignore when market ACTION diverges from market NARRATIVES. Consider bulking up on bonds and easing up on crypto.
