You are way overthinking this. That 13% loss is a sunk cost. Ditto with any VTI losses this year. It is psychologically hard to sell investments at a loss because even though you should know better, in the back of your mind it is conceding to failure. We are all just wired that way.
What is relevant is what BND will do from here vs what a similarly safe alternative will do.
Whether most bond return for a particular period is from price or distributions depends on what interest rates do, but look at BND as an example. The NAV at 12/31/2021 was $84.77 and is $73.60 today. During 2022 it paid out $1.70 in distributions and had $9.47 loss in value.
BND's Dec 6 monthly distribution was 0.164606/share... times 12 months is $1.98 annual distributions divided by $73.60 share price is a 2.7% yield. Or alterrnatively, if the $1.70 of 2022 distributions was repeated in 2023 that is only 2.3% of the current $73.60 NAV.
SWVXX, Schwab's money market fund is currently paying 3.8%. Below are current CD and bond yields from Schwab.
If you sold BND which is yielding 2.7% and bought a CD ladder where the rungs yield 4.37% to 4.80% and as rungs mature roll the proceeds into a new rung, which do you think you will come out ahead with?
| 3 Mo | 6 Mo | 9 Mo | 1 Yr | 18 Mo | 2 Yr | 3 Yr | 4 Yr | 5 Yr | 10 Yr | 20 Yr | 30 Yr+ |
CDs | 4.37 | 4.65 | 4.77 | 4.70 | 4.70 | 4.70 | 4.65 | 4.80 | 4.60 | -- | -- | -- |
Bonds | | | | | | | | | | | | |
U.S. Treasuries | 4.39 | 4.67 | 4.52 | 4.58 | 4.52 | 4.25 | 3.98 | 3.79 | 3.68 | 3.49 | 3.80 | 3.54 |
U.S. Treasury Zeros | -- | -- | -- | 4.41 | 4.25 | 4.04 | 3.81 | 3.74 | 3.69 | 3.66 | 3.89 | -- |
Government Agencies | -- | 4.37 | -- | 4.54 | -- | 5.30 | 4.17 | 4.26 | 5.33 | 4.61 | -- | -- |
Could BND outperform a CD ladder rolling over over 10 years... perhaps, but I doubt it .