On Friday, May 15, 2026, something happened that confused a lot of investors: US government bond rates jumped to their highest level in over a year, and at the same time, stocks fell, gold fell, and Bitcoin fell. How can everything drop at once? And what does this have to do with a portfolio that holds Bitcoin?
This question came up directly in managing the Performance portfolio, which holds a Bitcoin exchange-traded fund (a fund that tracks Bitcoin's price, here called IBIT). The selloff on Friday forced a careful look at whether the Bitcoin position still made sense.
A government bond is essentially an IOU from the US government. You lend the government $1,000, and they promise to pay you back in 10 years plus interest each year. The "yield" is that annual interest rate. When the US 10-year government bond yield is 4.58% per year (where it sat on Friday), that means the government is offering to pay $45.80 per year on every $1,000 you lend them. This matters because it sets a floor for what every other investment has to offer to be worth holding. If you can earn 4.58% per year with essentially zero risk (the US government has never defaulted), why would you hold something risky unless it offers meaningfully more? This is called the opportunity cost of risk.
Companies are valued based on their future profits. A tech company expected to earn $10 per share in three years is worth more today if that $10 is being discounted at 2% per year than if it is being discounted at 5% per year. Higher discount rates mean future earnings are worth less in today's terms. When bond yields rise sharply, the market reprices every company's future earnings downward at the same time. That is why Nasdaq and the S&P 500 both fell on Friday, even though nothing changed about the companies themselves.
Gold pays no yield at all. It just sits there. When bond yields are low or negative in real terms (after adjusting for inflation), gold looks attractive because at least it holds its value while bonds lose purchasing power. But when bond yields rise sharply, gold suddenly has real competition. Investors weigh 4.58% from a government bond against 0% from gold and some of them shift their money. This is also one of the key signals the Compass portfolio monitors. Charles Gave, the macro investor whose framework guides that portfolio, identified a specific threshold above which US bond yields make gold structurally less attractive. We are not there yet, but the direction matters.
Bitcoin is often described as digital gold, an inflation hedge, or an asset that benefits when central banks print too much money. All of that can be true over long cycles. But in the short term, Bitcoin behaves much more like a high-risk growth stock than like gold. It has no yield, it is highly volatile, and most investors who hold it are also holding stocks. When rates spike and investors need to raise cash or reduce risk quickly, they sell their most volatile assets first, including Bitcoin. This creates a paradox: the very asset meant to protect against currency debasement over decades gets sold in hours when rates spike. The reason is that most Bitcoin holders have a shorter time horizon than the thesis requires.
The Performance portfolio does not try to predict Bitcoin's long-term direction. Instead, it uses a specific rule: hold Bitcoin when its price is above the 200-day moving average (the average price over the past 200 days), and exit when it falls below. When the current price is above that average, momentum is positive. When below, momentum has shifted. On May 16, 2026, Bitcoin's price ($78,093) fell below its 200-day moving average ($81,752) for the first time in this portfolio's history. Because stock markets are closed on weekends and IBIT trades on a regular exchange, the actual sale will happen when markets open Monday.
The 200-day moving average is not a crystal ball. It will sometimes exit too early and miss a recovery. But it removes the need to make a judgment call in the middle of a volatile weekend, which is where most investment mistakes happen. If Bitcoin recovers above $81,752 before Monday and holds there convincingly, that is a reason to reassess. If it does not, the Performance portfolio sells and holds the proceeds in short-term T-bills (SGOV, a fund paying near current rates) until Bitcoin reclaims its moving average and global money supply starts expanding again. Both conditions must be met before re-entry. This is what rule-based investing looks like in practice: clear triggers, clear actions, no improvisation.