Yesterday's wave of rising markets was attributed to: Trump's signing of the 401(k) executive order.
However, people know very little about 401(k), how could it have such a big impact, and what will be its driving force for the market going forward?
Let me explain clearly in this article:
In the United States, there is a popular retirement savings plan called 401(k), which about 100 million people are using.
Every two weeks, a portion of their salary is automatically taken to buy stocks, bonds, and other assets, with a pre-set investment portfolio that individuals cannot easily change, and most people only adjust the allocation ratio once a year.
This mechanism has led to a stable flow of funds into the stock market over the past 20 years, acting like an automatic buying machine, with a total of "$12 trillion" in assets and an additional $50 billion in new funds coming in every two weeks.
Now imagine, if these 401(k) plans invest 1% of their portfolios in cryptocurrencies, it would bring in $120 billion in new funds; 3% would be $360 billion, and 5% would be $600 billion!
Moreover, this is not a one-time event; these funds will continuously flow into the cryptocurrency market because the mechanism of 401(k) is automatic and ongoing.
Therefore, compared to ETFs, the large-scale, automated inflow of funds from 401(k) has a greater impact on the cryptocurrency market.
This continuous flow of funds will set a very high "bottom line" for the cryptocurrency market, and may even push cryptocurrencies to a historical high.
Overall, the scale of funds in the 401(k) retirement plan is large and stable; even if just a small portion is directed towards cryptocurrencies, it would bring in huge amounts of capital, driving the market to surge, more significantly than the impact of ETFs.
