Strong positive news: Trump plans to open up US pension investment to cryptocurrencies, will trillions of dollars flow i

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원본 | Odaily Planet Daily ( @오데일리차이나 )

작가: jk

On Thursday local time in the United States, the Financial Times revealed that Trump is preparing to open up 암호화폐currencies, gold and private equity to the $9 trillion U.S. retirement market. According to three people familiar with the matter, Trump is expected to sign an executive order as soon as this week to open up alternative investments beyond traditional stocks and bonds to 401k retirement plans. These investments will involve a wide range of asset classes, from digital assets to metals, as well as funds focused on corporate acquisitions, private loans and infrastructure transactions. The above-mentioned people familiar with the matter said that the executive order will instruct regulators to investigate the obstacles faced in incorporating alternative investments into professionally managed funds used by 401k savers.

This policy shift will affect the US pension market, which is worth $8.9 trillion. Even if only 10% of 401k funds flow into the crypto market, it will inject $870 billion into the current $3.92 trillion global cryptocurrency market, equivalent to a 22.2% market increase. This is not only a major shift in US financial policy, but also a historic turning point in the global digital asset landscape.

What is 401k (the mainstream retirement plan in the United States)?

401k is the most common retirement savings tool in the American workplace, allowing employees to make long-term investments for retirement with tax benefits. Employees can choose to invest part of their salary into a traditional 401k (pre-tax contributions, tax after retirement) or a Roth 401k (post-tax contributions, tax-free after retirement) account, and employers will usually match contributions at a certain ratio. The funds in the account can be invested in a variety of assets, and the specific investment options are determined by the platform provided by the employer, usually including: stock funds (such as SP 500 index funds), bond funds, money market funds, and target date funds (automatically adjust risks according to retirement year).

The range of investment options is set by the provider of the 401k plan (such as Fidelity, Vanguard, etc.), and individuals cannot freely buy and sell any securities like in an IRA. Regarding withdrawal rules, there is no penalty for withdrawing funds from a 401k account after the age of 59 and a half, but traditional 401ks are still subject to income tax; if you withdraw money before this, you usually have to pay a 10% early withdrawal penalty plus the tax payable, unless you meet specific exemptions (such as permanent disability, major medical expenses, court-ordered alimony, first home purchase, etc.). In short, the 401k plan combines tax benefits, employer subsidies and diverse investment channels, and is the core asset accumulation tool in the US retirement system.

To be precise, pension plans have not been completely prohibited from investing in cryptocurrencies before; however, during the term of the previous administration, the U.S. Department of Labor explicitly warned employers in 2022 that they should be extremely cautious in allowing retirement accounts to access crypto assets , believing that their high volatility and speculation are inconsistent with the responsibility to serve the best interests of employees, which has led many employers to choose to avoid related options. Secondly, most 401k platforms (such as Vanguard and Schwab) do not open cryptocurrency investment channels, and technical access and compliance support are not mature. Even if leading institutions such as Fidelity have launched crypto account functions, employers must actively enable them, and the actual opening rate is extremely low. Furthermore, due to concerns about legal liability, employee asset losses, and long-term pension security, most employers are conservative about providing crypto investment options. These factors have led to the fact that although it is not prohibited by law, in practice, 401k investment in cryptocurrencies has long been in a state of theoretical feasibility and practical restrictions.

And now, the executive order will direct regulators to investigate the obstacles facing the inclusion of alternative investments in professionally managed funds used by 401k savers.

Huge pool of funds: $8.9 trillion market

The scale of the US 401k retirement fund market is beyond imagination. As of the third quarter of 2024, the total assets of 401k plans reached 8.9 trillion US dollars, serving more than 70 million active participants and involving 715,000 plans. This scale accounts for about 20% of the total retirement assets of 44.1 trillion US dollars in the United States, making it the worlds largest contribution retirement fund market.

Currently, 401k funds are mainly invested in traditional assets: 66% are invested in mutual funds, of which stock funds dominate, and bond allocations increase with age. The average account balance is $132,300, and younger investors have a higher proportion of stock allocations, and bond allocations usually do not exceed 6%.

The cryptocurrency market is currently worth $3.92 trillion, with Bitcoin dominating the market with 60.4% of the market, worth about $2.37 trillion. Despite its size, it is still relatively small compared to traditional financial markets. U.S. spot Bitcoin ETFs have approximately $12.3 billion in assets under management, of which BlackRocks iShares Bitcoin Trust (IBIT) alone accounts for $7 billion, or 50% of the total assets of crypto ETFs.

If the executive order is signed, what will be the market impact?

Based on detailed market data analysis, if 10% of 401k funds enter the crypto market, the following effects will occur:

Scale of capital inflow:

10% of total 401k assets = $870 billion, equivalent to 22.2% of the current crypto market cap
36.7% of Bitcoin鈥檚 market cap
More than 70 times the total assets of all current cryptocurrency ETFs

The entry of large-scale institutional funds will fundamentally change the market structure. Bitcoins market dominance may further rise to 70-75%, the demand for institutional-level infrastructure will surge, and custody services and compliance requirements will increase significantly. Volatility may increase in the early stage, but it will significantly reduce volatility in the long run and improve market depth and stability.

In an ideal model that only considers supply factors, the price of Bitcoin is linearly positively correlated with the market value, with a correlation coefficient of almost 1. Based on the current market value of about $2.4 trillion, if 10% of the pension market funds flow into it in the future, it is likely to grow to $3 trillion, and the price is expected to be around $150,000 to $170,000, with a central valuation of about $160,000. This forecast fully takes into account the impact of a small increase in supply.

New opportunities for Wall Street giants

According to the Financial Times, in recent years, private equity giants such as Blackstone and Apollo have actively sought to enter the US 401k retirement fund market and have begun to establish partnerships with large asset management institutions and retirement fund platforms such as Vanguard, Empower, and Great Gray Trust. This move is seen as a key breakthrough for the private equity industry to open up new sources of funds after traditional institutional funds (such as pensions and endowment funds) were blocked. According to industry forecasts, if the 401k plan can be successfully embedded, the private equity industry is expected to attract hundreds of billions of dollars in new assets.

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