Why I Hold Both S&P 500 ETFs and Bitcoin After Four Years of Bitcoin Underperformance
The author argues for holding both S&P 500 index ETFs (e.g., SPY, VOO, IVV) and Bitcoin (BTC/IBIT exposure) despite Bitcoin’s four years of relative underperformance. Key points: index fund flows and passive investing have shifted market dynamics, making sector moves and leadership heavily influenced by ETF flows rather than fundamentals. Portfolio sizing should reflect conviction and volatility; position size matters more than simple buy/hold labels. The writer discloses long positions in SPY, options exposure to other major ETFs, and IBIT (iShares Bitcoin Trust). The piece stresses that rapid reversals remain possible in algorithm-driven markets and that good companies may underperform when indexation dominates. For traders, the practical takeaway is to balance exposure between broad-market ETFs and Bitcoin, size positions according to volatility and conviction, and be mindful of ETF-driven sector rotations.
Neutral
The article is primarily an allocation and market-structure commentary rather than news of a specific event likely to move markets. It advocates holding both Bitcoin and S&P 500 ETFs and highlights ETF-driven indexation and volatility as drivers of performance. For short-term trading, the message is neutral: algorithmic flows can cause rapid reversals, creating both risks and opportunities but no clear directional bias. For medium-to-long term, the recommendation to size positions by conviction and volatility supports diversified exposure—this is neither explicitly bullish nor bearish for crypto prices. Historical parallels: periods of heavy indexation (e.g., post-2010 ETF growth) produced sector concentration and occasional sharp rotations but did not uniformly determine long-term asset class returns. Similarly, Bitcoin has experienced multi-year stretches of underperformance followed by strong rallies; that history supports a balanced, risk-managed exposure rather than an outright trade call. Traders should therefore treat the piece as tactical guidance on sizing and risk management rather than a signal to buy or sell Bitcoin outright.