The shadow of hand putting a coin into piggy bank.
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The US is quietly monetizing its $36 trillion deficit (printing money to pay for it). Just around the edges.
For now.
Which supports more upside for this 69% dividend that is powered by Bitcoin. And Uncle Sam’s money printer.
Yes, Fed Chair Jay Powell is stubbornly sticking with high rates. Vanilla pundits claim a “hawkish” Fed is supportive of the US dollar. Yes, but—let’s look past Powell’s hollow words for his actions!
Behind the scenes, the Fed is quietly “buying” up to $25 billion monthly from Treasury auctions. Without Fed involvement, less demand would mean higher rates to attract buyers. Who wants to fund Uncle Sam’s “spend like a drunken sailor” habit? So when an auction is slow, the Fed picks up the slack.
If you are scratching your head, you’re on to something. The Fed has the same income as my seven-year-old—zero.
My daughter asks mom or dad to pay for the ice cream. The Fed essentially creates the cash out of thin air to buy the bonds. This is effectively printing new money. The Treasury issues, the Fed absorbs!
This is bearish for the buck and explains why it is down 10% year-to-date relative to other major currencies. And why monetary hedges such as gold and Bitcoin have soared in 2025.
In a minute we’ll highlight a Bitcoin ETF that yields 69%. (No, that is not a typo.) But first, let’s discuss another policymaker trick.
Treasury debt—which the Fed is helping mop up—has traditionally been issued at the long end of the curve. Think bonds of 10 and 30 years in duration, purchased by pension funds and sovereigns.
Janet Yellen flipped this on its head during the end of her term as Treasury Secretary in another effort to keep long rates from rising. She began issuing 75% of government debt on the “short end” of the yield curve—two years in duration or less. This “short instead of long” issuing practice was unheard of only a few years ago.
Treasury Secretary Scott Bessent was critical of this practice. However, he has not only continued it but also turned up the volume a notch. Scotty dishes 80% of the debt in short duration!
US Issuing Short Term Debt
Contrarian Outlook
By issuing more short-term debt, the US needn’t rely on the “kindness” of strangers (other sovereign nations) and pension funds to finance its deficit. Banks can permanently stash more (cheaper!) short-term debt on their balance sheets. Recent legislative changes will let banks lend (long) against this debt, indirectly contributing to monetary expansion.
Which brings us to Bitcoin. Historically, gold was the haven against monetary mismanagement. Today, Bitcoin – the “OG crypto”—is rapidly emerging as a credible alternative store of value, endorsed by financial giants like BlackRock, Fidelity, JPMorgan Chase, and Morgan Stanley.
The bullish Bitcoin news keeps coming. Last week, President Trump signed an executive order allowing Bitcoin as an investment option in 401(k) retirement plans. “America’s ticker” SPDR S&P 500 ETF (SPY) will have some competition, especially with millennial retirement participants!
BITO Pays a Big Monthly Dividend
In April, we added ProShares Bitcoin ETF (BITO) to our Dividend Swing Trader portfolio to play this trend. BITO harvests premiums from Bitcoin contracts and pays an impressive monthly dividend annualizing to a sizzling 69%:
BITO Dividend
Income Calendar
I look at BITO as more of a trading vehicle than a “buy and hold” forever idea. After all, Bitcoin plummeted more than 75% between late 2021 and 2022. I’m not comfortable with readers risking that type of drawdown.
Fortunately, we don’t have to. BITO makes for a great Dividend Swing Trading fund.
Bitcoin, which drives the price (and payouts) of BITO, tends to rally sharply and sustain momentum for months at a time. This is exactly the type of holding period we strive for at DST. We like to buy right and then sit on our hands as gains accrue (swing, if you will) in our favor.
We’re up 36% since our initial BITO purchase, a trade that annualizes to 118%. The fund has already paid us back 19% of our original purchase price in dividends. Plus, it has appreciated in price.
When it dips, we buy more. On June 17, I issued an alert that BITO was a Best Buy—it has rallied 11.2% since (109% annualized). And that’s all before factoring in the new 401(k) catalyst.
Last Thursday in DST, BITO topped our Best Buy list again. It didn’t take long to pop—3.6% in four days (for a terrific 2,600%+ annualized).
Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever.
Disclosure: none