US Pension Funds
In the US, defined contribution pension funds such as 401(k) and IRAs constitute the largest investment pools used to ensure the future financial security of individuals. According to official sources, the total size of these funds is expected to reach approximately USD 9 trillion by 2025. In traditional investment portfolios, these funds are mostly channeled into low-risk assets, namely government bonds, mutual funds and large-scale indices. In the US, individuals’ retirement savings based on defined contribution are largely held in 401(k) accounts. If we look at the breakdown of these funds:
- Total 401(k) fund size by the end of 2024: $8.9 trillion
- Number of participants Over 60 million
- Average annual contribution: $7.300
- Average individual portfolio size (over 50): $250.000
Fund Portfolio Allocation (2024)
| Asset Type | Share in Average Portfolio |
|---|---|
| Equity Funds | %39 |
| Target Date Funds | %33 |
| Fixed Income Funds | %13 |
| Money Market & Cash | %5 |
| Other (REIT, Infrastructure, etc.) | %10 |
*The data in the table are official data from the Investment Company Institute (ICI).
However, this current structure has recently come under criticism as a framework with limited return potential and an inability to respond to the changing nature of the financial system. Donald Trump has proposed a radical transformation of this system, exciting investors with a draft that envisions the redirection of pension funds into alternative assets, especially private equity, infrastructure projects, gold and cryptocurrencies.
Trump’s Plan to Divert Pension Funds
The Trump administration has begun drafting a comprehensive presidential order for this transformation. The order aims to ensure that 401(k) plans have access to a broader range of investment classes, not just traditional assets. In this framework, key agencies such as the Department of Labor, Treasury and the SEC are expected to revisit the regulations in place.
The strategy in this draft aims not only to enable individual investors to achieve diversified returns, but also to increase liquidity in US financial markets, improve capital efficiency and support domestic economic growth.
On the other hand, pension funds in the US are regulated under the Employee Retirement Income Security Act (ERISA) of 1974. ERISA imposes an obligation on plan sponsors to protect the interests of participants. This means that alternative asset classes, especially highly volatile instruments such as crypto, have long been in the gray area in terms of these obligations. Trump’s draft presidential order seeks to introduce two key changes to these regulations:
| Alan | Proposed Amendment |
|---|---|
| Investment Class Expansion | Inclusion of assets such as crypto, gold, private equity, infrastructure |
| Safe Harbor Principle | Exempting managers offering these products from legal liability |
| Portfolio Limit | Limiting alternative assets to 5-10% of the total portfolio |
| Fund Type Configuration | Index funds managed instead of direct investment, ETF-like structures |
In this context, instead of direct cryptocurrency purchases, ETF-like structured products, thematic funds or governance-supported hybrid models will come to the fore. The 11 spot Bitcoin ETFs approved in early 2024 have reached a total asset under management (AUM) of $108-$153 billion as of July 2025. Leading issuers, including BlackRock (IBIT), Fidelity (FBTC), Ark Invest (ARKB), Bitwise (BITB) and Grayscale (GBTC), have made the ETF market the most powerful institutional vehicle representing crypto, driven by growing demand from institutional investors.
The State of BlackRock IBIT:
- Early 2024: $16 billion AUM (6 months post-launch)
- Mid-2025: $70-$90 billion AUM
- Total BTC assets: Over 700,000 BTC
- This corresponds to approximately 3.3% of the total supply in circulation.
So how can the liquidity that will enter the market under 401(k) be expected to affect ETFs?
If 401(k) funds integrate ETFs into their portfolios, we can foresee an increase of 3-5 times current AUMs.
| Input Source | Current AUM (2025) | After Entry (Forecast) | Increase Rate |
|---|---|---|---|
| All Spot BTC ETFs | $120 billion (average) | $400–$500 billion | 3.5–4.2x |
| BlackRock IBIT (example) | $70 billion | $200–$250 billion | 3–3.5x |
Market Reactions and Expectations
Today, the total size of spot Bitcoin ETFs is around $120 billion. If giant pension funds such as 401(k) funds add these products to their portfolios, it is estimated by various institutions that this figure could increase to $400-$500 billion. This would mean a significant jump in terms of market liquidity. These massive purchases through ETFs could tip the supply-demand balance in Favor of Bitcoin, meaning that increased demand in the face of limited supply could cause prices to move upwards.
Market players, on the other hand, generally welcome this development. Because it is obvious that increased institutional inflows will contribute to less volatility of crypto assets, more regulation and increased investor confidence. Of course, there are also criticisms. Some experts believe that opening up pension funds to high-risk products could pose a danger to participants. However, Trump’s proposed structure aims to balance these risks by limiting these investments to only 5-10% of the portfolio. In addition, directing investors to professionally managed instruments such as ETFs instead of directly buying cryptocurrencies makes the process safer.
Disclaimer
The information provided in this article is for educational and informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency investments and pension fund allocations involve inherent risks and may not be suitable for all investors. Readers are strongly advised to conduct their own research and consult with licensed financial advisors before making any investment decisions. The views expressed in this article do not necessarily reflect the official policy or position of Darkex or its affiliates.
