Bitwise Report: Even a 1% allocation of pension funds to BTC could send its price soaring to $194,000

A recent Trump administration executive order allowing institutions and private equity firms to invest in cryptocurrencies in 401(k) retirement plans is being viewed as a potential "nuclear button" that could detonate the cryptocurrency market.

According to a report by asset management firm Bitwise, 401(k) and other defined contribution retirement plans manage approximately $12.2 trillion.

If 1% of a plan's assets (approximately $122 billion) were allocated to BTC, its price could soar to approximately $194,000. If the allocation reached 10% (approximately $1.22 trillion), the price of #BTC could even reach $868,700.

Bitwise emphasized that given Bitcoin's historical sensitivity to global ETP (Exchange Traded Product) flows, even a 1% change in allocation could cause its price to rise by approximately 63%.

It is worth noting that cryptocurrencies were once considered "off-limits" for 401(k) retirement plans. However, the executive order signed by Trump on August 7th, directing the Department of Labor, the Securities and Exchange Commission, and the Treasury Department to expand access to alternative assets in 401(k) plans and placing cryptocurrencies on par with real estate and private equity, changed this dynamic.

The order also requires regulators to clarify fiduciary duty standards and remove legal barriers, paving the way for plan sponsors to include cryptocurrencies in their investment options while ensuring they act in the best interests of their savers.

If implemented as planned, this regulatory change, combined with the sheer volume of assets, could prompt firms like BlackRock and Fidelity to offer spot Bitcoin or Ethereum ETFs to their clients, either as standard options or through their own brokerage windows, opening up new channels for capital inflows.

According to the Investment Company Institute, employer-sponsored defined contribution accounts hold approximately $12.2 trillion, of which approximately $8.7-8.9 trillion are held in 401(k) accounts. This figure is significantly higher than the current global cryptocurrency market, valued at $4 trillion. Even a 1% fluctuation ($87 billion) could be enough to rebalance supply and demand.

In summary, the US 401(k) system is more than twice the size of the existing cryptocurrency market. Investing even 1% of this fund into the crypto market would not only bring a massive influx of capital into the market but also potentially trigger significant price fluctuations.