Bitcoin exchange traded funds( ETFs) gave Wall Street investors a regulated entry point into digital assets. These digital products have helped push crypto closer to the mainstream, with major issuers like BlackRock attracting billions in inflows.

But, the new 401(k) policy by Donald Trump’s administration could have a much bigger impact. By opening the US 401(k) retirement savings channel to crypto, the approval may create a sustained and automated demand stream far surpassing what ETFs have achieved. 

401(k) Market Size Positions Crypto for Massive Inflows

The US 401(k) retirement plan manages roughly $12 trillion. Every two weeks, an estimated $50 billion enters these plans, most of it through payroll deductions. Once set, allocations rarely change, sending a steady stream of capital into stock and bond markets for years at a time.

Under the new policy, crypto could be slotted into the same automatic process. Even a 1% allocation would generate about $120 billion in recurring inflows. A 5% slice could mean $600 billion, arriving month after month. This has sparked massive optimism across the crypto market with top market analysts saying that 401(k) could eclipse the achievements of Bitcoin ETFs. 

“Crypto in 401(k)s is WAY WAY BIGGER news than the ETFs,” said Tom Dunleavy, head of venture at Varys Capital. He pointed out that 401(k) buying happens regardless of daily market swings, making it a more predictable source of demand. 

Crypto in 401ks is WAY WAY BIGGER news than the ETFs

In the US, roughly 100 million Americans have a retirement investment vehicle known as a 401(k). Every 2 weeks, a portion of their paychecks are routed directly into purchasing a mixture of stocks and bonds. On autopilot. No… https://t.co/XRWf1NKSSw

— Tom Dunleavy (@dunleavy89) August 7, 2025

In tandem, André Dragosch, the European Head of Research Bitwise, also agrees that the news of the opening of the 401(k) to crypto by Trump’s administration, is massive. 

“Think the 401(k) EO approval could be bigger than the spot Bitcoin ETF approval. Consider the following…Total assets in 401(k) & other defined-contribution retirement plans: $12.2 trn. Total US ETF assets: $10.7 trn,” Dragosch wrote on X. 

How 401(k) Flows Differ From ETF Demand

Bitcoin ETFs, such as BlackRock’s IBIT, have delivered record-breaking inflows this year. But those flows depend on investors choosing to buy at a given time. Sentiment shifts can slow the pace just as quickly as they can drive it up.

In a 401(k), the process is different. Once an employee selects their investment plan, often in their first weeks on the job, purchases happen automatically with every paycheck. Allocations are typically revisited once a year, if at all. 

Dunleavy noted that this structure has helped keep the US stock market resilient for decades. If crypto were built into target date funds or other default options, that same resilience could start shaping the digital asset market.

“This is a HUGE driver of the equity market run and resilience over the past 20 years. A constant background bid for assets…and these aren’t one time flows. THEY KEEP BUYING ONCE ALLOCATIONS ARE SET,” Dunleavy said. 

Mapping Skepticism and Roadblocks Ahead

Regardless of the enthusiasm around the 401(k) policy, the shift will not happen overnight and there are potential pitfalls on the way. In particular, each 401(k) plan is overseen by a committee that has fiduciary responsibility and legal liability. Convincing these committees to approve of crypto, especially with Bitcoin and the general market now very volatile, could prove to be a slow process. 

The 401(k) policy shift has also attracted criticism. Peter Schiff, a longtime Bitcoin critic, for instance, warned that allowing Americans to put retirement money into crypto could deepen the retirement crisis. 

Most Americans have saved far less than needed to have any hope of retirement. By allowing Americans to gamble what little retirement savings they have in their 401(k)s on Bitcoin and other cryptos, Trump just made this problem much worse!

— Peter Schiff (@PeterSchiff) August 7, 2025

Still, several industry experts expect over half of 401(k) plans to add crypto within two years. The expectation rests on improving market infrastructure and growing demand from younger workers who see digital assets as part of a diversified portfolio.

“It will take time but its going to happen much, much quicker than you think. I’ll take the under on an allocation to crypto being in 50%+ plans within two years,” Dunleavy noted. 

Once Trump’s 401(k) new policy is fully implemented, the automatic buying nature of the plan coupled with inclusion of crypto could eclipse the one-off surges ETFs have seen. This could mark a deeper and more lasting step toward mainstream adoption of crypto.