How does Block leverage the S&P 500 status to drive trillions of Wall Street capital into BTC?

Author: Zz, ChainCatcher

In July 2025, Blockchain, led by Jack Dorsey, officially joined the S&P 500 index. The fintech company, which owns payment giant Square and mobile financial app Cash App, now joins the ranks of the 500 most representative US public companies. Its stock price subsequently surged 14% within days.

Being included in the S&P 500 means Blockchain will become a standard feature in mainstream investment portfolios worldwide. According to incomplete statistics, the size of passive funds tracking the S&P 500 exceeds $5 trillion. Based on Blockchain's weighting in the index, it is estimated that over $10 billion of traditional capital has been indirectly allocated to Bitcoin through holding Blockchain stock.

A trillion-dollar market is being leveraged by Blockchain

To understand the extent of Blockchain's leverage, we must first understand the S&P 500 as a capital allocation "protocol," not just a list of stocks.

The rules of this "protocol" are extremely simple, even clumsy: All index funds that track it have the sole mission of accurately replicating the index's composition and weightings. There is no room for subjective judgment, as any deviation means tracking failure.

Block secured admission to the "protocol" by passing its most stringent profitability review: the company must have achieved profitability in both the most recent quarter and the preceding year's financial reports. This admission represents the traditional financial system's highest endorsement of the viability of a pro-Bitcoin business strategy.

Thus, Block's inclusion is far more than just another story of a tech upstart joining an elite club.

The history of the S&P 500 is essentially a story of forced evolution, absorbing emerging industries and acknowledging new business models. A clear trajectory emerges from its landmark inclusions:

In 2006, Google (Alphabet) arrived, forcing funds to buy into a company whose core assets were intangible algorithms and user data.

In 2013, Meta (formerly Facebook)'s inclusion marked the formal absorption of ethereal Web2 concepts like "social graphs" by Wall Street's capital machine.

Tesla's inclusion in 2020 was a stark demonstration of the mechanistic power of this mechanism. It's estimated that it triggered a wave of passive buying exceeding $80 billion.

However, when these companies were included, the funds ultimately purchased equity in a company, whose value was closely tied to its specific business model and operating performance.

In contrast, when they were forced to buy Blockchain today, they acquired not only equity in a payments company but also direct exposure to the 8,363 bitcoins on its balance sheet.

This change immediately triggered a mechanical and irreversible capital flow. Given the core mission of the S&P 500 Index Fund, and assuming Blockchain's market capitalization of approximately $50 billion and a weighting of approximately 0.1% in the index, its inclusion would trigger over $10 billion in "passive buying" in the short term.

Even more intriguingly, much of this capital came from pension funds and sovereign wealth funds that previously hadn't actively touched crypto assets. This mechanical capital inflow bypassed traditional investors' psychological barriers to crypto assets.

If the inclusion of Google and Meta signaled Wall Street's forced acceptance of new business models, and Tesla's inclusion demonstrated the immense power of Wall Street to mobilize capital, then Blockchain's inclusion marked the first time Wall Street, driven by rules, was forced to embrace decentralized, non-sovereign monetary assets.

Block's Love Affair with Bitcoin

To understand Block's firm commitment to Bitcoin, one must first understand the evolving values of its founder, Jack Dorsey. His career hasn't been about chasing trends; it's about solving a core problem: breaking down the constraints that centralized institutions place on individual rights.

The story begins with a dramatic beginning. His co-founder, Jim McKelvey, was a glass artist who lost out on a $2,000 business because he couldn't accept credit cards. This experience deeply stung the two founders—why, in the 21st century, are small merchants still excluded from the modern payment system?

It was this pain point that gave rise to Square (Block's predecessor), a company that revolutionized the payments industry with its tiny white card reader. While traditional banks imposed significant barriers to entry for small and micro businesses, Square enabled anyone with a smartphone to accept credit card payments. This was Dorsey's first successful attempt to shift power from the center to the periphery, achieving what he calls the "democratization of payments."

However, it was his experience with Twitter that truly fueled his obsession with decentralization. The platform he co-founded initially carried a utopian vision of information democratization—giving everyone a free and equal voice. But as its influence grew, the pull of reality began to take hold. Business models demanded advertising revenue, governments pressured content censorship, and the public demanded accountability. Twitter was forced into the role Dorsey least wanted: arbiter of content.

"The power of a single company to dictate who can speak and what content can be distributed is too vast and too dangerous," Dorsey later reflected. He attempted to base Twitter on a decentralized protocol through the "BlueSky" project, but it was too late. This failure made him realize: true decentralization is rooted not in well-intentioned "articles of incorporation" but in the cold, cold "code protocols."

It was amid this disillusionment that Bitcoin caught his eye. In this permissionless, censorship-resistant, global financial protocol not owned by any single entity, he saw the ideal that Twitter had failed to realize.

Block's embrace of Bitcoin began with product development. In 2018, its Cash App began supporting Bitcoin transactions, allowing millions of ordinary Americans to purchase Bitcoin as easily as stocks. This decision was controversial at the time—traditional finance viewed cryptocurrencies as speculative bubbles, but Dorsey saw it as an extension of financial inclusion.

The turning point came in October 2020. With Bitcoin's price still hovering around $10,000, Block suddenly announced it had used company funds to purchase 4,709 Bitcoins, a $50 million investment. Wall Street analysts were baffled, wondering, "Why would a payments company hold such a 'speculative' asset?"

Dorsey's thinking was clear: "Bitcoin represents the native currency the internet needs."

In February 2021, Block made another move, spending $170 million to purchase 3,318 Bitcoins. The two positions totaled $220 million, resulting in a holding of 8,027 bitcoins. The market began to realize that this wasn't a spur-of-the-moment financial move, but an expression of faith.

Subsequently, Block's Bitcoin strategy deepened after 2023. Block launched the "Bitcoin Blueprint" initiative, announcing that 10% of its Bitcoin-related gross profits would be used to purchase Bitcoin each month.

What does this mean? Bitcoin is no longer a static investment sitting on the balance sheet, but a dynamic engine deeply tied to the company's business growth. Every Bitcoin transaction on Cash App contributes to Block's Bitcoin reserves.

This programmatic and predictable accumulation strategy sends a clear signal to the market: Block's commitment to Bitcoin is algorithmic, not driven by emotion.

Furthermore, Block's ambitions extend far beyond simply holding Bitcoin. Over the past few years, the company has launched an infrastructure campaign around Bitcoin. Cash App integrates the Lightning Network, making small Bitcoin payments as easy as sending a text message. The TBD division focuses on developing decentralized protocols, attempting to build financial infrastructure independent of any centralized entity. Open-source hardware wallet projects give ordinary users true control over their own Bitcoin. They're even investing in mining chips in an effort to further decentralize the Bitcoin network. "We're not betting on Bitcoin's rise, but on its becoming part of the global financial system." If this bet pans out, companies building the relevant infrastructure will have a significant advantage. This comprehensive investment ultimately paid off. When the S&P Dow Jones Index Committee evaluated Blockchain, they saw not just a company that simply held Bitcoin, but a "Bitcoin-native company" that had deeply integrated Bitcoin into its business model and was committed to promoting its adoption. For Jack Dorsey, Blockchain's inclusion in the S&P 500 felt more like a means to realize his ultimate vision: using Wall Street's money to build a future that ultimately doesn't belong to Wall Street.

From Square enabling small merchants to accept credit cards, to Twitter's efforts to empower everyone to have a voice, to Blockchain's all-in approach to Bitcoin, his journey remains unchanged: to decentralize power from the center to the periphery.

In the world of Bitcoin, he found the utopia he'd always sought, one unhindered by commercial interests.

However, achieving this utopia requires more than just ideals; it also requires concrete resources and execution.

Jack Dorsey's ultimate goal: using Wall Street's money to build a path to decentralization

Blockchain's business structure clearly serves Jack Dorsey's vision.

The two traditional businesses are the engine of this machine. Square provides payment and financial services to millions of merchants, contributing to a sustained cash flow. Cash App, a high-growth financial application for consumers, launched Bitcoin trading as early as 2018 and has accumulated a large and loyal user base.

These profits and users are continuously channeled into future divisions within The Block:

On the software side, Spiral and TBD are focused on building Bitcoin's underlying infrastructure. They develop the Lightning Development Kit (LDK), allowing developers to easily integrate Bitcoin micropayments into any application. They are also building decentralized identities (DIDs) and the tbDEX protocol, aiming to bypass centralized exchanges and enable seamless, peer-to-peer conversions between fiat and Bitcoin.

On the hardware side, the Bitkey wallet is dedicated to solving the challenges of Bitcoin self-custody, balancing security and ease of use through technologies like "2 of 3 multi-sig." Furthermore, the Proto division is developing an open-source Bitcoin mining system, aiming to challenge the monopoly of existing mining machine giants and maintain the decentralized nature of the Bitcoin network.

This isn't just wishful thinking, as the Bitcoin business itself is a powerful engine for user and revenue growth. At the peak of the bull market, Bitcoin transactions alone generated a staggering $10.02 billion in revenue for Cash App, accounting for a staggering 81.5%. This demonstrates that leveraging Bitcoin to attract users and generate revenue provides strong financial support for investment in these "future sectors."

This creates a perfect closed loop: using profits from traditional financial services to invest in and build Bitcoin infrastructure; then leveraging Bitcoin's appeal to acquire new users, which in turn fuels growth in traditional businesses.

Block also has fatal flaws

Block's grand narrative hides hidden concerns.

First, its technological dependence is the primary risk. Its deep integration with the Bitcoin protocol means that any protocol-level black swan event could have devastating consequences. Technologies like the Lightning Network, which its payment business relies on, are still in their early stages of development, and their stability remains to be tested.

Second, its execution risks should not be underestimated. Projects like TBD, Proto, and Bitkey have high technical barriers to entry, and their commercial prospects remain uncertain. Rating agency Morningstar maintained its "very high" uncertainty rating for Block, bluntly stating that inclusion in the index "does not change the company's fundamentals."

Meanwhile, Block's financial performance has also drawn attention. According to The Economic Times, Block's revenue growth has slowed, and its operating profit margin is below the S&P 500 average. Analysts believe the company needs to translate its "Bitcoin is the future" vision into tangible shareholder returns.

Final Note

For the crypto world, Block represents a possibility: to propel Bitcoin from the margins to the center, not through confrontation, but through construction and integration. This "Trojan Horse"-style infiltration may be more effective than any radical revolution.

But when trillions of dollars in passive funds are "forced" to embrace Bitcoin, a crucial question remains: Is this the beginning of Bitcoin's conquest of Wall Street, or the prelude to Wall Street's taming of Bitcoin?