On August 7, U.S. President Donald Trump signed an executive order that could significantly impact the cryptocurrency market by allowing fixed-contribution retirement plans, such as 401(k)s, to invest in alternative assets, including cryptocurrencies.
Changes in the U.S. Pension System
A significant number of Americans, over 90 million, participate in 401(k) plans, with total assets amounting to $9 trillion. Previously, these funds were primarily invested in low-risk products like Treasury bonds and blue-chip stocks. The new order allows for investments in riskier, potentially more profitable assets.
Potential of Cryptocurrencies in Pension Funds
According to calculations, if just 2% of 401(k) assets are directed toward cryptocurrencies, this could lead to an influx of around $170 billion, significantly increasing the capital available for investment in the cryptocurrency market. However, it should be noted that these funds will not arrive instantly, as many regulatory issues must be addressed and corresponding financial products developed.
Long-term Consequences for the Cryptocurrency Market
Trump's order not only opens the door for cryptocurrencies in pension plans but also represents a shift in managing pension assets by allowing for more active use of alternative investments. This could have both short-term and long-term impacts on the cryptocurrency market, increasing interest in investment products such as cryptocurrency ETFs.
The signed order by Trump allowing 401(k) plans to invest in alternative assets marks a significant change for the U.S. pension system and opens new opportunities for the cryptocurrency market, potentially reshaping its landscape.
