Value from stock dividends could soon flow into Bitcoin

Franklin Templeton is seeking regulatory approval for two exchange-traded funds (ETFs) that would combine U.S. stocks with automatic Bitcoin exposure, reflecting growing demand for crypto-linked investment products.

The asset manager filed the proposals with the U.S. Securities and Exchange Commission (SEC) on Thursday. If approved, the funds could begin trading as early as September. The products would maintain a 95% allocation to U.S. equities and a 5% allocation to Bitcoin-related assets, while using stock dividends to increase their Bitcoin exposure. — Cryptotimes report

For a while now, I've not seen much happening in the crypto ecosystem and I've pretty much been distracted by developments in artificial intelligence, but this one story caught my attention today.

The reason is quite simple.

Numbers. I am a numbers person and stories like this gets me thinking about numbers.

In this case, the first thought that popped into my head was:

How much value flows through stock dividends?

After a quick search, the answer is an estimated $2.09 trillion is earned through stock dividends annually.

This is more money than Bitcoin's marketcap today. Actually, this is almost the same value as the entire crypto industry's market capitalization which sits at $2.17 trillion today, according to data from Coinmarketcap.

So clearly this is a big story.

The convergence

The "DRIP" in the funds' name riffs on the dividend reinvestment plans long used to compound stock holdings and here repurposed to accumulate Bitcoin. Each underlying index starts with a 5% Bitcoin weighting and 95% equities, per the filing, with Bitcoin exposure capped at 20% and trimmed back at quarterly rebalances. — this is from a Decrypt report, which I think explains the strategic Bitcoin play here, better.

This is just a stock ETF with automatic Bitcoin exposure as an incentive. So it's a convergence of crypto assets and TradFi assets. Traditional investors gain exposure to the assets they are familiar with, whilst simultaneously investing in an emerging and alternative market, autonomously.

Buying the ETF essentially means investing 95% of your capital into US stocks with a 5% Bitcoin exposure that can grow to 20% and autonomously rebalanced.

In other words, your stock investments will DCA into Bitcoin and cash in your profits into stocks that pays you dividends to repeat the process.

When you read that out loud to truly understand the play, the product reveals much promise.

You see, this is something I've predicted would happen naturally, as crypto assets gain popularity in traditional markets.

People and companies will get creative on product and service launches that will pull trillions into the industry and the markets will do what it naturally does: price the value of these events against developments, revenue, and broader economies.

We should expect more investment products like this in the near and long term. This one targets an over $2 trillion value flow.