In a stunning turn of events, Bitcoin has plummeted 50% from its peak last October, wiping out a staggering $2 trillion in total market value. This calamity has led to renewed debate regarding the inclusion of cryptocurrencies in American retirement accounts, particularly 401(k) plans.
The 401(k) sector, which holds approximately $12.5 trillion in assets, is traditionally focused on stability and long-term growth. However, the recent volatility of cryptocurrencies raises formidable questions about their appropriateness as long-term investment options for retirement savings.
Lee Reiners, a faculty member at the Duke Financial Economics Center, emphasizes the need to protect retirement savings. He argues, “401(k)s exist to help people save for a secure retirement, not gamble on speculative assets with no intrinsic value.”
Amid these market challenges, President Donald Trump’s executive order issued in August 2025 allowed retirement plans to invest in alternative assets, including digital currencies. The nod from SEC chair Paul Atkins just before the market’s crash suggested an openness to integrating crypto into retirement portfolios. However, the market collapse that followed has left many wondering whether fund managers will steer clear of such investments.
Atkins claimed, “the time is right” to embrace cryptocurrencies within retirement markets, but the abrupt downturn might deter retirement fund managers from considering crypto.
Interestingly, many existing 401(k) plans already offer indirect exposure to cryptocurrencies. Major crypto firms like Coinbase are included in primary equity indices, providing a layer of crypto exposure to traditional portfolios. Reiners believes that even this indirect involvement suffices for investors.
The BlockTrust Response
BlockTrust IRA, a firm managing $70 million in retirement funds, has experienced the ramifications of the market’s volatility firsthand. Following its AI-supported investment platform, the company admitted it did not exit the market promptly prior to the crash.
According to Chief Technical Officer Maximilian Pace, “Last week, we did not get out as quickly because a lot of the underlying fundamental data we’re looking at is still very strong.”
The firm’s Animus Fund had showcased impressive performance in 2025, gaining 27% throughout the year, while standard Bitcoin buy-and-hold strategies saw losses between 6% and 13% for the same period. Pace advocates for a long-term investment philosophy, akin to that of a venture capitalist, suggesting investors should be patient with their 401(k) crypto allocations.
Pace maintains that any well-trained analytics should focus on a longer-term view, asserting, “You would be better thinking like a venture capitalist rather than like a day trader.”
Blockchain as a Gamechanger
Meanwhile, the subjects of on-chain technology and tokenized assets have gained traction in discussions about modernizing the retirement space. Robert Crossley, global head of industry and digital advisory services at Franklin Templeton, paints a picture of a fragmented retirement industry. He argues that blockchain could revolutionize retirement management by allowing on-chain wallets to hold tokenized assets.
Crossley envisions a future where, “Whether you are a saver, an investor, a spender, you have all of these different financial activities which are currently serviced very differently by different providers in your life.”
Yet, as Reiners points out, substantial legal concerns loom over the addition of crypto to 401(k) plans, with potential employee lawsuits discouraging employers from grouping cryptocurrencies in their offerings. He forecasts that without legislative changes, retirement sponsors are unlikely to embrace crypto.
As the crypto landscape continues to develop, its volatility starkly contrasts with traditional markets like the S&P 500 that benefit from regulatory structures stability. In this tumultuous environment, the question remains whether cryptocurrencies can truly secure a role in American retirement planning.
