The inclusion of cryptocurrency in US retirement plans could mark a milestone for Bitcoin adoption and unlock billions of dollars in new capital, potentially pushing the asset above $200,000 by the end of 2025, according to André Dragosch, the head of European research at crypto asset manager Bitwise.
President Donald Trump paved the way for cryptocurrency inclusion in US 401(k) retirement plans after signing an executive order on Aug. 7, granting Americans access to digital assets through their retirement plans.
The inclusion of crypto in 401(k) plans may be even more significant for the Bitcoin (BTC) price than the approval of the US spot Bitcoin exchange-traded funds (ETFs) in January 2024, Dragosch said.
This “bullish” development may be even “bigger than the US Bitcoin ETF approval itself,” signaling another $122 billion worth of new capital, assuming a modest 1% portfolio allocation, Dragosch told Cointelegraph during the Chain Reaction daily X spaces show on Monday, throwing in a price prediction for good measure:
“The official prediction remains $200,000 by the end of the year.”
“If you look at 401(K) and defined-contribution retirement plans in the US, they are huge,” said Dragosch, adding that 1% is a “relatively conservative” allocation estimate for the $12.2 trillion industry.
Is Bitcoin Headed for a 2025 Peak? Or is the 4-Year Cycle Dead? https://t.co/DckFjvkJIx
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Including digital assets in retirement plans will enable 401(k) portfolio managers to invest in Bitcoin ETFs, which may push Bitcoin’s price to new all-time highs, flashing another optimistic signal for Bitwise’s $200,000 Bitcoin price target for the end of 2025.
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Fed policy, retirement plans seen as dual drivers
Based on Bitwise’s survey for financial advisers, most portfolio managers are more likely to recommend a 2.5% or 3% Bitcoin allocation for retirement plans, suggesting more significant inflows than the initial 1% allocation.
The first Bitcoin inflows from retirement plan managers may come as soon as this fall, coinciding with the first expected interest rate cut by the US Federal Reserve, which may drive Bitcoin to new highs, said Dragosch, adding:
“If you see further Fed rate cuts, there’s definitely a case for $200,000 by the end of the year.”
Markets are pricing in an 83% chance that the Fed will keep interest rates steady during the next Federal Open Market Committee meeting on Sept. 17, according to the latest estimates of the CME Group’s FedWatch tool.
Fed target interest rate probabilities. Source: CME Group’s FedWatch tool
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Beyond improving monetary policy expectations, Bitcoin adoption may also be accelerated by the financial incentive of 401(k) plan providers to offer Bitcoin ETF exposure.
BlackRock, Fidelity and Vanguard are among the largest retirement plan providers in the US. While Vanguard has yet to “greenlight” crypto ETFs, “BlackRock and Fidelity have a huge economic incentive to include these Bitcoin ETFs in their standard plans,” said Dragosch.
US spot Bitcoin ETF overview by market share. Source: Dune
BlackRock is the issuer of the largest Bitcoin ETF, the iShares Bitcoin Trust, with over $84 billion in assets under management, accounting for 57.5% of the total market share, while Fidelity’s ETF is the second-largest, holding $22.4 billion, accounting for 15.3% of the total market share, Dune data shows.
Last Friday, US Securities and Exchange Commission Chair Paul Atkins confirmed that the regulatory agency is working with the Trump administration to enable retail investors’ retirement plan access to private equity, including crypto assets, but urged the necessity of “proper guardrails” around alternative investments.
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