The rally took off after President Donald Trump signed an executive order opening 401(k) retirement plans to a broader range of investments, including cryptocurrencies. The order directs the Department of Labor and Securities and Exchange Commission to publish new guidance for retirement accounts.
“This move effectively opens access to bitcoin and other cryptocurrencies for retirement investors, unlocking a staggering $8.7 trillion in assets under management.,” James Butterfill, head of research at CoinShares, said in an emailed statement.
Jake Ostrovskis, OTC trader at Wintermute, told CoinDesk that the impact of the move could not be understated.
“Just a 2% allocation to Bitcoin and Ethereum would represent 1.5x the total cumulative ETF inflows to date, while a 3% allocation would more than double the entire market,” Ostrovskis said. “Critically, these would be largely price-insensitive buyers focused on meeting allocation benchmarks rather than tactical trading.“
In practice, that means 401(k) funds would create “sustained, predictable demand flows that could provide a structural bid for digital assets regardless of short-term price volatility,” Ostrovskis added.
While crypto has never been formally banned from the retirement investments, previous guidance strongly discouraged fiduciaries from offering it.
Meanwhile, the Ethereum blockchain hit a new record for average daily transactions this week, according to data from Dune Analytics. The increase was underpinned by the SEC's clarification earlier this week that certain liquid staking models don’t constitute securities under the 1933 Securities Act, making it safer for institutions to offer staking services.
Ether's (ETH) price surged 4.6% over the past 24 hours to near $3,900.
While fireworks were going off in the crypto sector, TradFi was more subdued. The S&P 500 dropped in Thursday’s session, and the Nasdaq closed 0.35% higher, furthering the concentration of megacaps in the indexes. The 10 largest stocks now account for 76% of the entire stock market capitalization, data shared by Barchart shows.
Gold rose on tariffs being imposed on some bullion bars. Looking ahead, investors are bracing for July’s inflation report, due next week, which may influence the odds of a dovish Fed interest-rate cut in September. Stay alert!
