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The 60/20/20 Portfolio

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by Coinbits
Friday, Oct 17, 2025 - 18:07

Conventional wisdom had been that the efficacy of a 60/40 portfolio was a given, one of the many transitory phenomena that somehow became viewed as scientific facts in the postwar period.

Now, the 60/40 portfolio is dead. People who follow it tend to lose out on life changing opportunities, and lose to inflation as well. But have we really spent enough time thinking about the implications of this radical departure?

Morgan Stanley's Chief Investment Officer recently advocated for a 60/20/20 strategy weighted toward hard assets and away from bonds. A reset in how sophisticated investors are conceptualizing value is underway.

Gold and bitcoin recently reached new all-time highs. The conventional response that both assets have entered "overbought" territory misses the structural shift. This is a deliberate retreat from fiat currency and fiat assets occurring across the highest levels of global finance.

China's strategy illuminates this transition. Over the past fifteen years, the country has systematically accumulated substantial gold reserves and constructed a parallel settlement network through BRICS, making clear that dollar reserve dominance is being fundamentally challenged.

The combined market capitalization of bitcoin and gold remains relatively modest compared to global equities and bonds. Should capital continue flowing toward hard assets as structural factors suggest it will — both can appreciate substantially.

All roads lead to bitcoin.

NEWS

Bitcoin and crypto bank Erebor wins conditional federal charter

The Office of the Comptroller of the Currency has granted a conditional national bank charter to Erebor Bank, a tech-driven lender that plans to offer both traditional and bitcoin-related financial services. It's the first new charter approved under Comptroller Jonathan Gould, who said the move proves the OCC "does not impose blanket barriers" on banks engaging with digital assets.

Washington cracks the vault open

After years of regulatory hostility that shuttered bitcoin-friendly banks like Silvergate and Signature, Washington's tone is shifting. Erebor's approval marks another step toward reopening the U.S. banking system to bitcoin-aligned institutions, following the end of the Biden era's "Operation Chokepoint," which sought to curtail the industry's access to banking.

Bitcoin mining stocks are exploding

Bitcoin miners are on a tear. The combined market cap of major mining firms has surged past $90 billion, more than doubling in just two months. Bitdeer (BTDR) led this week’s rally, climbing 30% after reporting a 33% jump in realized hashrate and expanding its self-mining fleet to 35 EH/s, with a 40 EH/s target by month’s end.

The rally has spread across the sector: CleanSpark, Cipher, IREN, and Bitfarms all hit fresh 52-week highs, while Applied Digital and Cipher Mining are up 3–4x over the past year. Investors are rewarding miners that do more than mine — those building AI and high-performance computing (HPC) capacity alongside their bitcoin operations.

Miners are leading the next leg of the bull.

It’s a reversal from last cycle’s washout. As the network’s industrial backbone consolidates, miners are proving they’re builders of the world’s next great compute infrastructure, powered by bitcoin.

Paxos accidentally mints and burns $300 trillion in PYUSD stablecoins

Paxos, the issuer behind PayPal's PYUSD stablecoin, accidentally minted $300 trillion worth of tokens on the Ethereum blockchain Wednesday afternoon, then burned them 20 minutes later for just $2.66 in transaction fees. The error occurred during an internal transfer and was immediately identified and corrected, with Paxos confirming there was no security breach and all customer funds remained safe.

Centralization is fragile

The incident exposed a vulnerability in non-bitcoin architecture. One human error at a centralized issuer inflated the supply by 120,000x a mistake that is mathematically impossible on bitcoin's decentralized network. Bitcoin's consensus mechanism requires agreement across thousands of independent nodes to validate any transaction, meaning no single person or company can unilaterally alter its monetary policy, regardless of intent or accident.

Gold hits all-time high of $4,200 as retail investors queue around the world

Gold surged to an all-time high of over $4,200 per ounce this week, with reports of bank-run style lines at precious metals shops in Sydney and other cities as retail consumers seek physical stores of value. Buyers cited macroeconomic uncertainty, dollar debasement, and distrust of financial institutions as primary motivations, with gold up 61% year-to-date as central banks accelerate accumulation.

When hard money wins, bitcoin wins

Gold, silver, and bitcoin now rank among the top 10 largest assets globally, all sharing safe-haven properties that strengthen during currency debasement and institutional distrust. As the dollar faces its worst year since 1973, the synchronized rally in hard assets signals a broader loss of confidence in fiat currencies, the exact condition bitcoin was designed to address.

U.S. targets Cambodian crime ring, seizes record $14.4 billion in bitcoin from pig-butchering scams

The Department of Justice indicted Cambodian-based Prince Group founder Chen Zhi for operating pig-butchering scams and human trafficking, seizing 127,271 bitcoins ($14.4 billion) in its largest-ever bitcoin seizure. Coordinating with the DOJ, the Treasury Department sanctioned Prince Group as a transnational criminal organization and severed Cambodian Huione Group from the U.S. financial system for laundering bitcoin scam proceeds.

Seizure accelerates strategic reserve growth

This record seizure will likely be deposited into Trump's strategic bitcoin reserve, accelerating U.S. government bitcoin accumulation.

BITCOIN ADOPTION CONTINUES

Compass Coffee completed the first-ever bitcoin payment on a Square terminal in Washington, DC, ahead of Square's nationwide merchant rollout beginning November 10, 2025.

Rep. Troy Downing introduced legislation to permanently authorize bitcoin in 401(k) retirement plans, codifying Trump's August executive order and potentially unlocking billions in retirement flows to bitcoin.

Estonian fintech Bringin launched a comprehensive bitcoin platform for the eurozone, combining self-custody with automatic bitcoin-to-euro conversions and Visa debit cards for everyday spending.

Telegram founder Pavel Durov revealed that much of his wealth comes from bitcoin purchased in 2013, rather than from Telegram, which only became profitable in 2024.

Nasdaq-listed Zeta Network raised $230.8 million through a private sale accepting bitcoin and bitcoin-backed SolvBTC tokens to strengthen its corporate treasury strategy.

Bitwise reported 48 new public companies adopted bitcoin treasuries in Q3 2025, bringing the total to 172 companies holding over $117 billion, representing nearly 5% of all bitcoin supply.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Bitcoin treasuries and the Lightning Network: A match made in heaven?

For years, companies holding bitcoin treasury assets operated under a simple philosophy: buy and hold. Bitcoin on the balance sheet was treated as a scarce, appreciating asset — static value locked away, not meant to be moved.

A new paradigm is emerging.

Thanks to the Lightning Network, treasury managers can now transform idle bitcoin into productive capital. Rather than passively storing bitcoin, companies can deploy their holdings into Lightning liquidity channels and earn native, non-custodial yield through routing fees.

Here's how it works: when a bitcoin treasury operator places liquidity into the Lightning Network, they're providing the infrastructure that enables instant payments. Every transaction routed through their node generates a small fee. As payment volume scales, so does the routing income. According to Bobby Shell from Voltage's analysis, this yield is very real —LQWD has disclosed 24% annualized returns, while Cash App highlights 9.79% yields on Lightning.

The elegance lies in the structure. Unlike custodial yield products that introduce counterparty risk, Lightning routing is bitcoin-native and non-custodial. Treasury managers never relinquish control of their bitcoin. The asset generating income is the asset you hold. There's no swapping, no intermediary, no dilution—just the network working as intended.

This creates a virtuous cycle. As Square enables its four million merchants to accept bitcoin via Lightning, and Cash App reports 25% of its bitcoin payments already flow through Lightning, demand for liquidity grows. Treasury companies positioned to supply that liquidity capture returns while simultaneously strengthening bitcoin's infrastructure.

Forward-thinking treasurers might ask: why hold bitcoin passively when you can put it to work for the network and earn yield in the process? Bitcoin becomes both store of value and payment layer simultaneously.

The Lightning era for treasuries has begun.

COIN CHECK

How many transactions per second can the Lightning Network theoretically handle, compared to bitcoin's base layer?

A. 10 transactions per second

B. 1,000 transactions per second

C. 1 million transactions per second

D. 10 million transactions per second

Check your answer at the end of the page.

FROM THE MEME POOL

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ANSWER

C.1 million transactions per second

Bitcoin’s base layer can only handle around 3 to 7 transactions per second on average due to block size and 10-minute block time constraints. In contrast, the Lightning Network has no hard upper limit defined by the protocol and is often cited to be capable, in theory, of processing millions of transactions per second across its network, far outpacing the largest fiat payment networks on the planet. Visa’s own materials say VisaNet can handle about 65,000 transaction messages per second at peak, which is among the highest of the big card networks. Lightning’s throughput is bounded primarily by hardware, bandwidth, and routing.

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
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