Reduce IBIT: Time To Trim Bitcoin

I took a look at the largest Bitcoin ETF, iShares Bitcoin Trust ETF (IBIT) about five weeks ago, suggesting that readers consider buying the dip . It has gone up a bit, but I am less optimistic about Bitcoin (BTC.X) currently and suggest that anyone who bought recently consider taking profits or reducing losses.

IBIT Has Bounced

When the upgrade article was published, Bitcoin was trading at about $61,000, and it is currently near $63,000 as of July 10th). Looking at IBIT year-to-date, it is down sharply, tracking Bitcoin:

While it has bounced, the bounce has been miniscule! It helps to take a longer view. IBIT was launched in early 2024, and it (and Bitcoin) are up a lot since then:

So, IBIT has bounced, though not impressively. In its short history, it has been very volatile in its price!

Inflation Risks Remain, But Precious Metals Are Falling

My interest in Bitcoin and IBIT is due to my concern about inflation related to the massive federal debt that the U.S. has. This has resulted recently in concerns about the value of the dollar, as nations with large debt historically have devalued their currency to inflate away their debt. The U.S. dollar, though, has been stable in 2026 against major currencies. The ICE U.S. Dollar Index is up about 3% so far this year.

Most people view precious metals like gold as a hedge against inflation, and gold has soared over the past several years. More recently, though, it has been plunging. Here is the action since the end of 2022 for Gold and other precious metals ETFs:

Gold is up the least of the three precious metals ETFs in this chart, and way behind Bitcoin, but it is up more still than the S&P 500 in price since the end of 2022 (+97.4%). Gold has dropped in 2026, trailing the return of stocks, but it is doing better than IBIT! Since my IBIT upgrade last month, gold and silver (and the miners) have dropped, while IBIT has rallied:

I mentioned inflation risk, and the debt is my biggest concern, but there is another big issue: the war with Iran. The recent weakness in precious metals seems to be related to that non-ending situation, with gold down 22% since the end of February. IBIT has dropped only 2.6% since then.

IBIT Has Outpaced Other Bitcoin Investments

In that last article, I discussed how Strategy, Inc. (MSTR), a big bettor on Bitcoin that is leveraged, had sold some Bitcoin. I didn't expect MSTR to continue to sell it, and I thought that this might be the cause of the dip in IBIT and Bitcoin. On July 6th, it filed an 8-K that indicated it had sold about $80 million worth of Bitcoin in June and $135 million in the first few days of July:

The combined $216 million sounds like a lot, but it's really not, as the company holds $63.7 billion. With that said, it is more than that first sale at the end of May that totaled just $2.5 million (at a price of $77,153 for Bitcoin). In my upgrade article in June, I showed then that IBIT had performed worse than MSTR and Coinbase Global (COIN) since the end of February, but this no longer remains the case. I had initiated coverage of IBIT at Seeking Alpha with an article published on 2/23 before the market opened, and here is how these three ETFs have performed since then:

I don't think that the sales themselves have been depressing Bitcoin recently, but there is a risk that MSTR could sell a lot more.

The Risks Remain

In that last article here at TalkMarkets, I pointed to some risks for Bitcoin that could weigh on it (and IBIT). First, while Bitcoin has plunged recently, it is still up a lot over the last several years:

The other risks remain, and I will repeat them. While I don't think that MSTR will necessarily blow up, there could be forced selling by a large holder of Bitcoin. There could be other blockchain alternatives to it, like Ethereum, or government regulation could impact it negatively. While Morgan Stanley Bitcoin Trust ETF (MSBT) remains below its initial price and not widely followed, there remains a competitive threat of lower fees. Since the upgrade article, MSBT has increased by 25% to $310 million, while IBIT has declined by 9% to $46.8 billion. Finally, the risk from Quantum computing or AI helping to overcome the security

Conclusion

Many writers and commenters on Bitcoin discuss that it perhaps has zero value or that it could soar. My own outlook for Bitcoin assumes that it is likely to rise somewhat, though it could fall dramatically too. It remains extremely speculative.

In early June, I thought that Bitcoin and IBIT were attractive, and Bitcoin does offer potential inflation protection, but the changes in precious metals and the continued weakness in MSTR take away from my optimism in the near-term. I still view IBIT as a fantastic ETF, but I am downgrading it from Buy to Hold based on my concerns regarding its sole asset, Bitcoin.