🛌 The Era of Passive Bitcoin Flows

FIRE BTC #42 - Bitcoin exposure for everyone

Until fairly recently, bitcoin exposure and adoption was 100% an active choice.

You had to actively seek it out. That meant learning about bitcoin and being convinced of its value enough to want to buy it. Then you had to set up a new account with an exchange, wire money, and make your purchase. Every sat was bought with intention.

But we’re entering a new era where millions of people have bitcoin exposure without ever lifting a finger.

The era of passive bitcoin flows has begun.

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🚰 Piping in the flows

Just last week, I wrote about how 401(k) plans will soon have bitcoin right alongside your standard menu of mutual funds and target-date funds. Once enabled, millions of workers will passively stack every two weeks just by making their normal retirement contributions.

We’ve already seen it happen with ETFs, which have provided a steady, programmatic bid for bitcoin. We’ve also seen the rise of Bitcoin Treasury Companies—public companies that act like corporate bitcoin hedge funds. Their primary mission is to accumulate BTC and give investors who might not be able to buy bitcoin directly a way to gain exposure through traditional capital market vehicles.

And as more public operating companies add bitcoin to their balance sheets, the stock market indexes that include them will automatically gain bitcoin exposure and benefit from its price appreciation. Passive flows from index investors will push more capital into these companies’ stocks, giving them additional firepower to keep stacking sats. This is happening in real time.

📈 Index investing = passive bitcoin adoption

There are already three companies in the S&P 500 that hold bitcoin: Block (Square) (SQ), Coinbase (COIN), and Tesla (TSLA).

Strategy (MSTR) could be next. It’s already in broader market index funds like VTI, which is a favorite among FIRE practitioners. The moment it joins the S&P 500, every S&P 500 index fund—and every 401(k), IRA, and brokerage account invested in it—will be buying MSTR shares. That’s indirect bitcoin exposure flowing into millions of portfolios.

GameStop (GME) bought $500 million of BTC in May, which is now worth ~$550 million. In July, as part of its filing to go public, Figma announced that it had $70 million of bitcoin exposure via the bitcoin ETF. Both are (or will be) in VTI, which means they’re set to receive passive inflows from broad market index investors.

As more companies add bitcoin, and as bitcoin goes up in value, they become a bigger part of the indexes…which means more passive inflows…which means more demand…which means higher bitcoin prices…which means those same companies grow larger in the indexes.

It’s a self-reinforcing loop.

👨‍🍳 Force-feeding bitcoin

When everyone has indirect bitcoin exposure, the incentives shift. Even if people didn’t choose bitcoin consciously, they start caring about protecting the value of their holdings.

Passive ownership becomes a gateway to active ownership. Indirect adoption becomes direct adoption. And over time, the population’s financial incentives align with bitcoin’s survival and adoption dynamics.

Ironically, even Mr. Money Mustache—the FIRE influencer who once wrote off bitcoin as “stupid” and steered his audience away from it—will have a growing stake in bitcoin…whether he likes it or not.

VTI is a favorite among the FIRE community, which has long scoffed at bitcoin as mere speculation.

Now, they’ll be swept up in the bitcoin adoption wave, and they’ll be better off for it.

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That’s it for this week — thanks for reading!

Until next time,

Trey ✌️