Trump Administration Overturns Biden’s 401(k) Crypto Ban—Retirement Plans Go Digital

Washington shakes as the former president’s policy shift opens retirement accounts to volatile crypto investments. Biden-era protections? Gone.

Wall Street braces for a gold rush—or a reckoning—as Main Street traders get a risky new toy. Because what’s retirement without a little gambling, right?

New demand for BTC?

Most ETF analysts and asset managers viewed the update as a new massive demand angle for BTC. Bitwise Europe head of research, Angre Dragosch, said, 

“This was by far the bigger news today. Approximately $8.9 trillion are managed in 401k plans in the US. bitcoin demand shock incoming.”

For his part, Ryan Rasmussen, another Bitwise top analyst, noted that a 1% demand from 401ks could outpace ETF inflows. 

“If just 1% of the $8 trillion in 401k funds flows into Bitcoin, that’s $80 billion of new demand, and 2x more than what’s flowed into Bitcoin ETFs.”

For perspective, BTC doubled from $36K to $72K in the Q1 2024 after U.S. spot ETFs debuted. Overall, the asset has rallied nearly 180% to over $110K since early 2024. But it has briefly retraced to $107K at press time.  

BTC to eye $120K, says Glassnode

However, on-chain signals suggested that BTC may eye $120K, according to Glassnode. In its weekly on-chain report on 28 May, the firm said, 

“In the event of further upside, the $120k level appears as a key zone of interest, with sell-side pressure expected to accelerate in and around this zone based on on-chain price models intersected in prior cycles.” 

Source: Glassnode 

The firm’s $120K projection was based on MVRV extreme deviation pricing bands. In early and late 2024, BTC price consolidated between extreme bands (red and orange). Currently, this translated to $120K and $100K levels. 

It’s worth pointing out, however, that profitability of STH (short-term holders) has surged 16% per the SOPR indicator.

But CryptoQuant’s Axel Adler noted that selling pressure was relatively muted to past profit-taking activity to threaten BTC from climbing higher. 

Source: CryptoQuant

Put differently, the drop from over $111K to $107K may just be a brief cool-off before a potential rebound. 

That said, the closest price magnet in the short-term was liquidity pool between $104.4K and $106.2K. Over $5B of Leveraged longs were piled in this region, raising liquidation risks if BTC slips to $103K. 

Source: CoinGlass

On the other hand, a whopping $10B of leveraged shorts could be wiped out if BTC jumps to $113K.