Trump’s Big Boost: US Pension Funds Eye Crypto, Could Trillion-Dollar Inflow Ignite Market? Bitcoin Target: $160,000?

On Thursday local time, the Financial Times reported that Donald Trump is planning to open the $9 trillion US retirement market to alternative investments such as cryptocurrencies, gold, and private equity. Three insiders revealed that Trump may sign an executive order as early as this week, allowing 401k retirement plans to include alternative investments beyond traditional stocks and bonds, covering digital assets, metals, and funds focused on corporate acquisitions, private lending, and infrastructure deals. The order will direct regulators to investigate barriers to including these alternative investments in professionally managed funds used by 401k savers.

What is 401k? The “Core Code” of US Retirement Savings

A 401k is the most popular retirement savings tool in American workplaces, akin to a “tax-advantaged long-term investment account.” Employees can choose to set aside part of their salary into a traditional 401k (pre-tax contributions, taxed upon withdrawal in retirement) or a Roth 401k (after-tax contributions, tax-free withdrawals in retirement). Employers typically also make “matching contributions” (like “free money”). Funds are managed by employer-provided platforms (e.g., Fidelity, Vanguard) and can be invested in stock funds, bond funds, etc., but cryptocurrencies and other alternatives were barely options before.

Why “Visible but Unreachable” Before? The “Three Barriers” to Crypto Investment

While not fully legally prohibited, crypto investment in 401k faced practical hurdles:
1. Regulatory Warning: In 2022, the US Department of Labor warned employers that the high volatility and speculative nature of crypto assets might violate the “duty to act in employees’ best interests,” making employers cautious;
2. Platform Restrictions: Most 401k platforms (e.g., Vanguard, Schwab) didn’t offer crypto investment channels, with immature technology and compliance support;
3. Employer Conservatism: Fearing legal liability, employee asset losses, and pension security, even if a few platforms (e.g., Fidelity) provided crypto features, employer adoption rates were extremely low.

The $8.9 Trillion “Behemoth” Enters: Will Crypto Market Get “Epic Inflow”?

As of Q3 2024, US 401k plans had total assets of $8.9 trillion, serving over 70 million participants and accounting for 20% of US total retirement assets, making it the world’s largest defined contribution pension market. Currently, funds are mainly invested in traditional assets (66% in mutual funds, dominated by stock funds).

The global cryptocurrency market currently has a total market cap of about $3.92 trillion, with Bitcoin accounting for 60.4% (around $2.37 trillion). If just 10% of 401k funds flow into crypto, that’s $870 billion—equivalent to 22.2% of the current crypto market cap, 36.7% of Bitcoin’s market cap, and 70 times the total assets of all existing crypto ETFs!

Could Bitcoin Surge to $160,000? Institutional Money to Reshape Market

Large-scale institutional inflows could bring three major changes:
– Market Structure Remodeled: Bitcoin’s dominance may rise to 70%-75%, with surging demand for institutional-grade custody and compliance;
– Volatility “High Then Low”: Short-term volatility may increase, but long-term market depth and stability will improve;
– Price Prediction: If Bitcoin’s market cap grows to $3 trillion due to capital inflow, a linear model estimates prices could reach $150,000-$170,000, with a midpoint of around $160,000.

Wall Street Giants’ “New Cake”: Private Equity Seizes Opportunity

Private equity giants like Blackstone and Apollo are actively布局 the 401k market, partnering with asset management platforms like Vanguard and Empower. Industry forecasts suggest that if successfully integrated into 401k plans, the private equity sector could attract hundreds of billions of dollars in new funds. This policy shift is not only a major change in US financial policy but may also mark a historic turning point in the global digital asset landscape.

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This content is AI-generated and does not constitute investment advice. Please exercise your own rational judgment.

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