Bitcoin’s 50% drop from its October peak has done more than simply erase $2 trillion in market value: It has reignited a fierce debate about the fiat mathematics of the American retirement system.
As investors scramble to analyze the factors that fueled the latest decline, industry observers wonder whether volatile digital assets have any business in a $12.5 trillion 401(k) plan. market designed for stability.
“If investors want to speculate in cryptocurrencies, they can do so on their own. 401k plans exist to help people save for a secure retirement, not to gamble on speculative assets with no intrinsic value,” said Lee Reiners, a professor at the Duke Financial Economics Center and co-host of the Coffee & Crypto podcast.
US President Donald Trump issued an executive order in August allowing 401(k)s and other defined contribution retirement plans to access alternative assets, including digital assets. Even Securities and Exchange Commission (SEC) Chairman Paul Atkins said last week, just on the eve of the latest brutal cryptocurrency sell-off, that “the time is right” to open the retirement market to cryptocurrencies.
But the recent decline in cryptocurrencies could derail retirement fund managers from their plans to add cryptocurrencies to 401(k) plans.
Reiners said several large cryptocurrency companies, such as Coinbase (COIN), are already included in major stock indexes, meaning many 401(k) plans already have indirect exposure to cryptocurrencies, and that should be enough.
“Unless Congress changes the law, plan sponsors are unlikely to include cryptocurrencies or ETFs as plan options because they don’t want to be sued by their employees. For any employer who was considering it, I’m sure recent events have made you reconsider,” Reiners said.
The problem with putting everyone’s savings into cryptocurrencies is that the industry is relatively young and extremely volatile, and pension funds are looking for stable growth.
Buy and hold can work for assets like the S&P 500, which experiences high volatility primarily during Black Swan events such as the 2008 financial crisis or the uncertainties of COVID-19. However, given the size of traditional markets, the government often intervenes to stop the bleeding and numerous regulatory frameworks exist to protect people’s investments.
But in the case of cryptocurrencies, much of their activity is just speculation, and that means prices can experience extreme swings over a weekend or week, which can quickly decimate billions in value without regulatory oversight of market movements. This makes it even more stressful for investors to invest their life savings into it.
I didn’t ‘quickly leave’
To put the uncertainty into perspective, many businesses have likely been caught off guard by the sudden drop in bitcoin and cryptocurrencies in recent days.
In fact, the recent brutal selloff was so violent and sudden that BlockTrust IRA, an AI-powered retirement platform that has added $70 million in IRA funds in the past 12 months, was caught up in the bloodbath.
“Sometimes we look at things we say, ‘you know what, we should get out,’ and sometimes we don’t. And last week, we didn’t get out as quickly because a lot of the underlying fundamental data that we’re looking at is still very strong,” CTO Maximilian Pace said in an interview with CoinDesk.
However, in relation to the sudden sell-off, Pace pointed to the company’s “broad sense of analysis”, which effectively operates on longer time frames than short-term operations. That strategy helped it outperform in 2025, and the company added that it “is not necessarily affected by volatility.” The AI trading firm’s Animus Fund outperformed bitcoin throughout 2025 and was up 27% from January to December 2025, while the bitcoin buy-and-hold strategy was down between 6% and 13% over the same period, the company said in a press release.
In Pace’s opinion, stepping back and considering cryptocurrency investments over a five- to 10-year time horizon is the right way to think about 401(k) plans.
“It would be better to think like a venture capitalist than a day trader,” Pace said. “There are ways to reduce investment risk, whether from a time or strategic perspective, that make it more attractive or more acceptable for things like 401(k) programs. But like anything, there is risk.”
The future of pensions
Perhaps we need to zoom out further and think about actual blockchain technology for retirement investment management rather than just putting money into tokens.
Robert Crossley, global director of digital advisory and industry services at Franklin Templeton, thinks exactly that. The retirement industry, which he says is isolated, slow and over-regulated, could be revolutionized with on-chain wallets containing tokenized assets.
And by doing so, an individual’s digital wealth will be much more aligned with the rest of their lives, Crossley said.
“Whether you’re a saver, an investor or a spender, you have all these different financial activities that are currently served very differently by different providers in your life,” Crossley said in an interview.
If regulations come into play that do not prohibit innovations, it is very likely that blockchain technology can eliminate that fragmentation of intermediaries. It is possible that the industry could see a supply of wallets that “unlock the possibility of programmable assets and securities and the ability to see all your assets in one place and control them directly, rather than being an intermediary,” he said.
“When something is tokenized, it becomes software. That software could be an asset, but it could also be a benefit, it could also be a liability. It could be an entire 401(k). It could be your entire DC. [defined contribution] plan,” Crossley said.
