Trump authorizes inclusion of cryptocurrencies in 410(k) plans, dismantling protective measures instated under the Biden administration.
The Trump administration has reversed a ban on cryptocurrency investments in 401(k) retirement plans, originally implemented under the Biden administration. The Department of Labor's 28th May statement rescinded a directive that previously warned of 'extreme care' before including digital assets in 401(k) investment plans.
Although the agency's change in stance does not signify an endorsement of cryptocurrencies, it indicates a more neutral position. This shift could potentially drive significant demand for Bitcoin (BTC).
Analysts and asset managers view the update as an opportunity for substantial demand for BTC. Bitwise Europe's head of research, Angre Dragosch, stated that approximately $8.9 trillion are managed in 401k plans in the U.S., hinting at an imminent Bitcoin demand surge.
Ryan Rasmussen, another top Bitwise analyst, pointed out that a 1% demand from 401k funds could surpass ETF inflows. If just 1% of the $8 trillion in 401k funds were invested in Bitcoin, this represents $80 billion worth of new demand, more than twice that of Bitcoin ETFs.
Since the debut of U.S. spot ETFs, BTC has doubled from $36K to $72K in the Q1 2024, and has since rallied nearly 180% to over $110K. However, it briefly dipped to $107K at press time.
Despite the temporary dip, according to Glassnode, BTC may aim for $120K. Glassnode's weekly on-chain report on the 28th of May projected that in the event of further upside, the $120k level would be of significant interest, with sell-side pressure expected to intensify in this zone.
The firm's $120K projection is based on MVRV extreme deviation pricing bands. In early and late 2024, BTC price consolidated between extreme bands, translating to current $120K and $100K levels. It's worth noting that profitability of short-term holders has increased by 16%, as per the SOPR indicator.
However, selling pressure remains relatively subdued compared to past profit-taking activity, suggesting a potential rebound. The closest short-term price magnet lies within the liquidity pool between $104.4K and $106.2K, where significantly amount of leveraged longs have been accumulated, potentially increasing the risk of liquidation if BTC slips to $103K. On the other hand, a massive $10B of leveraged shorts could be wiped out if BTC jumps to $113K.
- Despite a temporary dip in Bitcoin's price at $107K, Glassnode projects that it might aim for $120K, with sell-side pressure expected to intensify in this zone.
- If 1% of the $8 trillion in 401k funds were invested in Bitcoin, this represents $80 billion worth of new demand, more than twice that of Bitcoin ETFs.
- Bitwise Europe's head of research, Angre Dragosch, stated that approximately $8.9 trillion are managed in 401k plans in the U.S., hinting at an imminent Bitcoin demand surge.
- The reversal of the ban on cryptocurrency investments in 401(k) retirement plans by the Trump administration could potentially drive significant demand for Bitcoin (BTC), as stated by analysts and asset managers.
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