$7 Billion Fleeing Traditional Portfolios as Dollar Weakens

Investors have been flocking to gold and Bitcoin funds in record numbers, with $7 billion pouring into such assets over just five days. This surge is a stark rebuke of the traditional 60/40 portfolio, which relies heavily on stocks and bonds priced in dollars.

According to Bitwise CIO Matt Hougan, this approach leaves investors 100% exposed to fiat currency, as both components are vulnerable if the dollar loses value.

The trigger for this shift appears to be Washington's handling of US debt, which surpassed $40 trillion on August 19. The Treasury Secretary responded by doubling long-bond buybacks, a move seen as an attempt to cap yields while deficits remain wide.

This has sent shockwaves through the market, with the dollar falling to a three-month low near 98.8 and gold reaching new highs. Central banks have already begun shifting their reserves away from US Treasuries, favoring hard assets instead.