Why Trump’s 401(k) Crypto Push Could Eclipse Bitcoin ETFs

ETFs (exchange-traded funds) may have opened the door for crypto to Wall Street, but the 401(k) channel could blow it wide open.

Following the policy shift to open 401(k)s to crypto, financial experts believe resultant flows could dwarf those into ETFs, potentially unlocking hundreds of billions in sustained, autopilot demand.

401(k) Crypto Investment Inflows Could Far Outpace Bitcoin ETFs

The US 401(k) system holds roughly $12 trillion in assets, with $50 billion in fresh capital flowing every two weeks.

Traditionally, this money is funneled into stock and bond allocations through pre-set investment plans that most Americans rarely adjust. Now, crypto could be added to that mix.

“Crypto in 401(k)s is WAY WAY BIGGER news than the ETFs…These aren’t one-time flows…401ks + DATs [Target Date Funds] with at the money shelves put a ridiculous floor of crypto going forward,” wrote Tom Dunleavy, head of venture at Varys Capital.

Even a modest allocation could transform the market. At just 1%, the sector would see $120 billion in recurring inflows. This means a 5% allocation could translate into $600 billion, fed by payroll deductions, month after month.

Meanwhile, the Bitcoin ETF narrative has dominated headlines this year, with products like BlackRock’s IBIT seeing record inflows.

However, as institutional players choose to buy, ETFs rely on investor discretion. On the other hand, 401(k)s operate differently, automating buying based on long-term allocations, typically reviewed annually.

“This is a HUGE driver of the equity market run and resilience over the past 20 years…401(k)s just keep buying,” Dunleavy added.

With Trump’s order expanding retirement access to private assets, including crypto, analysts say this could be the true institutional unlock for the space.

“People don’t realize yet how big today’s news has been for crypto. This will be seen as the watershed moment for mainstream adoption, much more than the ETF,” said Glassnode co-founder Negentropic.

Critics Say 401(k) Crypto Investment Access Is Risky and Premature

Still, the path forward is marred with friction. Integrating crypto into 401(k)s requires the green light from tens of thousands of plan committees. Notably, each of these gatherings has fiduciary obligations and legal liability concerns.

Peter Schiff, a vocal crypto skeptic, warned that allowing Americans to gamble their few retirement savings on Bitcoin could worsen the retirement crisis. Critics argue that without safeguards, this could invite risk rather than resilience.

However, experts expect over 50% of 401(k) plans to have crypto allocations within two years.

Meanwhile, as skeptics focus on volatility, others are building infrastructure to make crypto retirement-ready. Thomas Chen, CEO of Function, sees the trend as validation of a broader shift.

“Trump’s 401(k) crypto policy validates our core thesis that Bitcoin’s future lies in productive deployment through institutional-grade infrastructure,” Chen told BeInCrypto in a statement.

He argues that retirement fund fiduciaries are not looking to hold idle crypto. They want transparent, yield-generating assets that are governed and compliant, especially if trillions in retirement assets are on the line.