The Impact of Pensions on the Crypto Market: Trump's Executive Order Sparks Discussion

Recently, a far-reaching executive order has attracted widespread attention in the financial sector. This executive order allows 401(k) retirement savings plans to invest in a more diversified range of assets, including private equity, real estate, and encryption assets. This means that up to $8.7 trillion in retirement funds could potentially enter the crypto market, which will have a significant impact on both the crypto market and the pension system.

The pension system in the United States is mainly composed of three parts: a government-managed universal program, a voluntary retirement plan for individuals, and a 401(k) plan managed by enterprises. The 401(k) plan is a private enterprise retirement benefit plan established under the Internal Revenue Code of 1978, funded jointly by employers and employees, allowing employees to choose their investment portfolio and enjoy tax benefits.

As of March 31, 2025, the total assets of all employer-sponsored defined contribution retirement plans have reached $12.2 trillion, with the 401(k) plan holding $8.7 trillion. Currently, these funds are primarily invested in stock funds and hybrid funds.

The new executive order will allow 401(k) plans to invest in private equity funds, Bitcoin, and other cryptocurrencies as well as other alternative assets. This initiative not only expands the investment channels for pensions but also provides a higher level of recognition for crypto assets.

For the crypto market, this policy could bring significant changes. A large number of crypto asset products in the form of ETFs are expected to emerge. More importantly, since pensions typically have a longer holding period, this could enhance the price support for mainstream cryptocurrencies and may even促使其从风险资产向避险资产转变.

However, this policy has also raised some concerns. Traditional financial participants point out that the high fees and low liquidity of alternative assets may be detrimental to individual investors. In addition, the development and popularization of new products also require some time.

The market's reaction to this news seems to be lagging. The price of Bitcoin only rose 2% within 24 hours after the announcement, but a few days later it broke through $122,000. In contrast, Ethereum's response was quicker, with a significant price increase within 24 hours after the news and surpassing $4,000 on August 8.

Although Bitcoin and Ethereum both saw increases, the rise of Ethereum was more pronounced. Market analysts believe this may be related to the increase in institutional investor holdings, support from large ETF institutions, and certain market sentiments.

In contrast, with the exception of a few blue-chip altcoins, the performance of most altcoin markets remains sluggish. This may be because institutional investors tend to choose lower-risk mainstream encryption currencies.

It is worth noting that the latest employment data released by the U.S. Department of Labor shows that non-farm payrolls in July grew less than expected, and the unemployment rate rose slightly, increasing expectations that the Federal Reserve may cut interest rates. The market predicts an 88.4% probability of a 25 basis point rate cut by the Federal Reserve in September.