Last week the former—and perhaps future—president signed an executive order allowing 401(k) retirement plans to allocate capital to a broader menu of assets: private equity, real-estate trusts, and, for the first time, crypto. Up to US $8.7 trillion in retirement savings could now flow into digital assets. The move is seismic for both pensions and crypto, yet the market reaction was oddly muted: Bitcoin barely budged, while Ethereum ripped higher.

Understanding the 401(k) Behemoth

To grasp why the order matters, one must first decode America’s retirement architecture.
Tier one is Social Security, financed by payroll taxes. Tier two is the voluntary Individual Retirement Account (IRA), akin to China’s personal-pension pilot. Tier three—our protagonist—is the employer-sponsored 401(k), named after section 401(k) of the 1978 U.S. tax code. Workers and firms co-fund the account; employees pick from a menu of mutual funds and enjoy tax-deferred growth until retirement.

Unlike China’s centrally pooled enterprise annuity, each 401(k) participant controls an individual brokerage window and bears full investment risk. Roughly 60 % of U.S. households own a 401(k); as of March 31, 2025, these plans alone hold US $8.7 trillion out of US $12.2 trillion in defined-contribution retirement assets.

From Bonds to Bitcoin: A Century-Long Shift in Pension Mandates

Before the Great Depression, pensions were confined to Treasuries, high-grade corporates, and munis—safe, but stiflingly low-yield.
The 1929 crash forced trustees to rethink. The “prudent-man rule” gradually allowed equities, and the Employee Retirement Income Security Act of 1974 codified diversified, risk-aware investing for public pensions.

On 7 August 2025, Trump pushed the envelope further, explicitly authorizing 401(k) plans to invest in private-equity funds, Bitcoin, and other “alternative assets.” The order directs Labor Secretary Lori Chavez-DeRemer to coordinate with Treasury, the SEC and other regulators to streamline rule changes, and instructs the SEC to facilitate self-directed pension access to alts.

Implications: A Radical Makeover for Pensions, a Mainstream Badge for Crypto

For pensions, the directive is a lurch from conservative to hyper-permissive. Liquidity-light, complex products will now mingle with vanilla index funds, ratcheting up both expected return and tail-risk.

For crypto, the symbolism is even weightier: digital assets have received de-facto “federal endorsement.” ETF issuers will race to wrapperize coins for 401(k) menus. Because 401(k) money turns over slowly—Vanguard clocks 0.5 trades per account per month—any allocation becomes sticky, lowering realized volatility and potentially morphing BTC and ETH from risk-on punts into quasi-store-of-value assets. Even a 5 % allocation from the eligible pool would inject US $450 billion, dwarfing all previous institutional inflows.

Caution Flags on the Road to Adoption

Traditional-finance voices warn that alts charge higher fees, disclose less and lock up capital. Asset managers salivate at the prospect, but unsophisticated savers may not fully grasp the risks, raising litigation exposure. Moreover, product development and sponsor education typically take years; the market’s initial shrug reflected that lag.

Indeed, BTC eked out only a 2 % daily pop on the headline. Spot and ETF volumes showed no immediate spike—yet by 11 August Bitcoin pierced US $122 k.

Ethereum’s Sharper Reflex

In sharp contrast, ETH surged. Within 24 hours spot volume ballooned and price leapt from US $3.6 k to above US $4 k; by press time ETH traded at US $4 299. ETH ETFs saw US $680 million in net inflows over two sessions. Derivatives echoed the move: CME ether futures traded at an annualized 10 % premium to spot, richer than BTC’s basis, tempting some traders to rotate out of Bitcoin.

Why ETH Outran BTC—Three Catalysts

1. Corporate Treasury Accumulation
   Ethereum-centric firms already custody roughly US $13 billion worth of ETH; at lower unit prices the same dollar flow moves the needle further.

2. ETF Tailwind
   ETH spot ETFs have pulled in US $6.7 billion since launch, buoyed by BlackRock’s heft. BlackRock’s vision of “the entire financial system on-chain” positions Ethereum—the settlement layer of choice—as prime beneficiary.

3. Street Evangelism
   Bitmine chairman Tom Lee’s viral podcast predicting US $15 k ETH (180 k views) galvanized retail interest.

Altcoins Left at the Station

While ETH reclaimed US $4 k and the broader alt index tacked on 15 %, the rally was narrow. Beyond a handful of blue-chip names, 70–80 % of smaller tokens remain in the doldrums. Institutional capital—risk-averse and liquidity-sensitive—prefers BTC and ETH, leaving little spill-over to riskier plays. The meme “today’s ETH is last year’s BTC” captures the mood: a sector-wide alt-season is unlikely, but pockets of outperformance remain for nimble hunters.

The Next Macro Spark: Fed Easing

A softer U.S. jobs print on 9 August—non-farm payrolls missed and unemployment ticked up—has jolted rate-cut odds. Fed governor Michelle Bowman endorsed three cuts this year and will host a community-bank conference on 9 October. CME FedWatch now prices an 88.4 % chance of a 25 bp cut in September, up from 11.6 % for unchanged policy. Should the Fed pivot, risk assets—including crypto—could receive yet another tailwind.

Last week the former—and perhaps future—president signed an executive order allowing 401(k) retirement plans to allocate capital to a broader menu of assets: private equity, real-estate trusts, and, for the first time, crypto. Up to US $8.7 trillion in retirement savings could now flow into digital assets. The move is seismic for both pensions and crypto, yet the market reaction was oddly muted: Bitcoin barely budged, while Ethereum ripped higher.

Understanding the 401(k) Behemoth

To grasp why the order matters, one must first decode America’s retirement architecture.
Tier one is Social Security, financed by payroll taxes. Tier two is the voluntary Individual Retirement Account (IRA), akin to China’s personal-pension pilot. Tier three—our protagonist—is the employer-sponsored 401(k), named after section 401(k) of the 1978 U.S. tax code. Workers and firms co-fund the account; employees pick from a menu of mutual funds and enjoy tax-deferred growth until retirement.

Unlike China’s centrally pooled enterprise annuity, each 401(k) participant controls an individual brokerage window and bears full investment risk. Roughly 60 % of U.S. households own a 401(k); as of March 31, 2025, these plans alone hold US $8.7 trillion out of US $12.2 trillion in defined-contribution retirement assets.

From Bonds to Bitcoin: A Century-Long Shift in Pension Mandates

Before the Great Depression, pensions were confined to Treasuries, high-grade corporates, and munis—safe, but stiflingly low-yield.
The 1929 crash forced trustees to rethink. The “prudent-man rule” gradually allowed equities, and the Employee Retirement Income Security Act of 1974 codified diversified, risk-aware investing for public pensions.

On 7 August 2025, Trump pushed the envelope further, explicitly authorizing 401(k) plans to invest in private-equity funds, Bitcoin, and other “alternative assets.” The order directs Labor Secretary Lori Chavez-DeRemer to coordinate with Treasury, the SEC and other regulators to streamline rule changes, and instructs the SEC to facilitate self-directed pension access to alts.

Implications: A Radical Makeover for Pensions, a Mainstream Badge for Crypto

For pensions, the directive is a lurch from conservative to hyper-permissive. Liquidity-light, complex products will now mingle with vanilla index funds, ratcheting up both expected return and tail-risk.

For crypto, the symbolism is even weightier: digital assets have received de-facto “federal endorsement.” ETF issuers will race to wrapperize coins for 401(k) menus. Because 401(k) money turns over slowly—Vanguard clocks 0.5 trades per account per month—any allocation becomes sticky, lowering realized volatility and potentially morphing BTC and ETH from risk-on punts into quasi-store-of-value assets. Even a 5 % allocation from the eligible pool would inject US $450 billion, dwarfing all previous institutional inflows.

Caution Flags on the Road to Adoption

Traditional-finance voices warn that alts charge higher fees, disclose less and lock up capital. Asset managers salivate at the prospect, but unsophisticated savers may not fully grasp the risks, raising litigation exposure. Moreover, product development and sponsor education typically take years; the market’s initial shrug reflected that lag.

Indeed, BTC eked out only a 2 % daily pop on the headline. Spot and ETF volumes showed no immediate spike—yet by 11 August Bitcoin pierced US $122 k.

Ethereum’s Sharper Reflex

In sharp contrast, ETH surged. Within 24 hours spot volume ballooned and price leapt from US $3.6 k to above US $4 k; by press time ETH traded at US $4 299. ETH ETFs saw US $680 million in net inflows over two sessions. Derivatives echoed the move: CME ether futures traded at an annualized 10 % premium to spot, richer than BTC’s basis, tempting some traders to rotate out of Bitcoin.

Why ETH Outran BTC—Three Catalysts

1. Corporate Treasury Accumulation
   Ethereum-centric firms already custody roughly US $13 billion worth of ETH; at lower unit prices the same dollar flow moves the needle further.

2. ETF Tailwind
   ETH spot ETFs have pulled in US $6.7 billion since launch, buoyed by BlackRock’s heft. BlackRock’s vision of “the entire financial system on-chain” positions Ethereum—the settlement layer of choice—as prime beneficiary.

3. Street Evangelism
   Bitmine chairman Tom Lee’s viral podcast predicting US $15 k ETH (180 k views) galvanized retail interest.

Altcoins Left at the Station

While ETH reclaimed US $4 k and the broader alt index tacked on 15 %, the rally was narrow. Beyond a handful of blue-chip names, 70–80 % of smaller tokens remain in the doldrums. Institutional capital—risk-averse and liquidity-sensitive—prefers BTC and ETH, leaving little spill-over to riskier plays. The meme “today’s ETH is last year’s BTC” captures the mood: a sector-wide alt-season is unlikely, but pockets of outperformance remain for nimble hunters.

The Next Macro Spark: Fed Easing

A softer U.S. jobs print on 9 August—non-farm payrolls missed and unemployment ticked up—has jolted rate-cut odds. Fed governor Michelle Bowman endorsed three cuts this year and will host a community-bank conference on 9 October. CME FedWatch now prices an 88.4 % chance of a 25 bp cut in September, up from 11.6 % for unchanged policy. Should the Fed pivot, risk assets—including crypto—could receive yet another tailwind.