The recent approval of cryptocurrency in American 401 (K) retirement accounts can mean a serious upgrade in terms of the adoption and price growth of Bitcoin. The move is based on an executive order issued by Donald Trump on August 7, 2025, that will enable American workers to invest part of their retirement savings into cryptocurrencies.
Andre Dragosch, the Head of European Research at Bitwise, believes that such a change in outlook has the potential to inject up to $122 billion into the Bitcoin market in the event that as little as 1 percent of the retirement market, worth $12.2 trillion, invests in the cryptocurrency. Dragosch said that the effects of retirement plan access could be more profound than the spot Bitcoin ETFs in January 2024.
Bitcoin ETFs are likely to be the primary gateway for 401 (K) allocation. Increased inflows will benefit BlackRock, which already runs the largest Bitcoin ETF with more than $84 billion in assets under management, and Fidelity, which has $22.4 billion in its portfolio. Financial advisors' current recommendations of up to 3 percent Bitcoin exposure in retirement portfolios could see total inflows surpass initial estimates.
Such allocations can start as early as the fourth quarter of 2025. This is expected due to the US Federal Reserve's expected interest rate cuts, which may also favour risk assets such as Bitcoin. Market observers feel that this policy support and market access will increase the chances of this year ending at $200,000 or more.
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The US SEC has expressed a willingness to allow higher access to cryptocurrencies in retirement plans, provided that they integrate protective measures. Such regulative activity is a good indicator of the process of introducing digital assets and traditional finance.
Also, the generational trend favours the inclusion of Bitcoin. Younger investors are better users of digital assets and are at their peak earning and saving years. Their increased control of investment options in retirement plans could also increase the demand for crypto-based products in 401(k) plans.
Additionally, though the existing $200,000 price target is hypothetical, Bitcoin's entry into retirement accounts marks a new wave of long-term demand. Macroeconomic changes, clarity in regulation, and investors' attitudes will still determine prices' future performance.