How Passive Investing Reshaped Stocks—and Why Bitcoin ETFs Could Follow the Same Path

Passive investing has emerged as one of the most influential forces reshaping equity markets, and the data confirms its growing dominance. According to Bloomberg Intelligence data compiled by ETF analyst James Seyffart, stocks with rising passive ownership have dramatically outperformed those losing passive ownership over the past three years. The market has increasingly rewarded inclusion, ownership, and fund flows alongside fundamental performance.

The chart’s most striking implication is that the anti-passive trade has often resembled a repository for small, volatile, newly listed, low-quality names that structural flows have left behind. Ownership concentration compounds over time, and stocks inside the passive investment ecosystem tend to remain there.

Bitcoin is now developing a similar infrastructure. The U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETF listings in January 2024, fundamentally altering how institutional capital reaches Bitcoin. As of April 28, U.S. spot Bitcoin ETFs have accumulated approximately $58.4 billion in cumulative net inflows, with BlackRock’s IBIT alone holding roughly $61.9 billion in net assets.

In March 2025, Euronext listed BlackRock’s iShares Bitcoin ETP in Europe, positioning it as a solution for investors seeking Bitcoin exposure without the complexity of direct trading and custody. Meanwhile, Deutsche Börse’s Clearstream expanded its institutional crypto custody and settlement services to include Bitcoin alongside traditional assets. These developments have transformed Bitcoin into a wrapper investment accessible through standard brokerage channels, broadening its ownership base.

Bloomberg Intelligence data reveals that U.S. stocks with rising passive ownership returned up to 224.8% over three years, while those losing passive ownership fell 41.4%. The engine behind this outperformance is the recurring flows into funds holding the same securities, creating a persistent, price-insensitive bid that compounds over time.

Bitcoin ETFs operate differently, driven by investor demand through creation flows and redemptions on a discretionary timeline, independent of reconstitution schedules or index mandates. A BlackRock portfolio note from December 2024 suggested that a 1% to 2% Bitcoin allocation could be reasonable for multi-asset portfolios, provided investors accept the risk of rapid price declines and believe in broader adoption. When the world’s largest asset manager frames a volatile asset in allocation-sizing terms, it signals a shift toward mainstream portfolio consideration.

A 2025 Federal Reserve note found that crypto ETP bid-ask spreads are comparable to those of other ETFs and ETPs of similar size. The note also emphasized monitoring NAV premiums in crypto funds as a measure of the growing interconnectedness between crypto and equity markets.

The data confirms the infrastructure is functioning. From April 14 through April 24, U.S. spot Bitcoin ETFs added about $2 billion in net inflows, based on Farside Investors’ daily totals. However, April 27 saw a single-day outflow of $263.2 million, demonstrating both the capacity to build a structural bid and the speed at which institutional flows can reverse course.