Bitcoin’s 50% plunge from its October peak has done more than just erase $2 trillion in market value — it has reignited a fierce debate over the fiduciary math of the American retirement system.

As investors scramble to parse the drivers of the latest crash, industry observers are asking if volatile digital assets have any business being in a $12.5 trillion 401(k) market designed for stability.

“If investors want to speculate on crypto, they are welcome to do so on their own. 401ks exist to help people save for a secure retirement, not gamble on speculative assets with no intrinsic value,” said Lee Reiners, a lecturing fellow at the Duke Financial Economics Center and a co-host of the Coffee & Crypto podcast.

U.S. President Donald Trump issued an executive order in August that allowed 401(k) and other defined-contribution retirement plans access to alternative assets, including digital assets. Even Securities and Exchange Commission (SEC) chair Paul Atkins said last week, just on the eve of the latest brutal crypto selloff, that “the time is right” to open up the retirement market to crypto.

But the recent rout in crypto might just turn retirement fund managers away from plans to add crypto to 401(k)s.

Reiners said that several large crypto companies, such as Coinbase (COIN), are already included in major equity indices, which means many 401(k) plans already have indirect exposure to crypto, and that should be enough.

“Unless Congress changes the law, plan sponsors are unlikely to include crypto, or ETFs, as plan options because they don't want to be sued by their employees. For any employers that were considering it, I'm sure recent events have them reconsidering," Reiners said.

The problem with putting people's life savings into crypto is that the industry is relatively young and extremely volatile, and pension funds are for stable growth.

Buying and holding can work for assets like the S&P 500, which sees large volatility mostly during Black Swan events, such as the 2008 financial crisis or COVID-19 uncertainties. However, given the size of traditional markets, the government often steps in to stop the bleeding, and numerous regulatory frameworks exist to protect people's investments.

But for crypto, much of its activity is just speculation, and that means prices can see extreme swings over a weekend or a week, which can quickly decimate billions in value with no regulatory oversight over market moves. This makes it even more nerve-wracking for investors to put their life savings into it.

Didn't 'get out quickly'

To put the uncertainty in perspective, many firms were likely blindsided by the sudden crash in bitcoin and crypto over the last few 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 in the bloodbath.

“Sometimes we look at things that we say, ‘you know what, we should get out,’ and sometimes we don't. And 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,” Chief Technical Officer Maximilian Pace said in an interview with CoinDesk.

However, concerning the sudden selloff, Pace pointed to the firm’s “broad sense of analytics,” which operates effectively over longer timelines than short-term trading. That strategy helped it outperform in 2025, and the firm added that it is “not necessarily wavered 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 6% to 13% over the same period, the firm said in a press release.

In Pace's view, zooming out and considering crypto investments over a five- to 10-year time horizon is the right way to think about 401(k) plans.

“You would be better thinking like a venture capitalist rather than like a day trader,” Pace said. “There are ways of de-risking the investment, either from a time perspective or from a strategy perspective, that make it more attractive or more acceptable for things like 401(k) programs. But like anything, there's risk.”

The future of pensions

Perhaps there’s a need to zoom out further and think about the actual blockchain technology for retirement investment management than just putting money into tokens.

Robert Crossley, Franklin Templeton's global head of industry and digital advisory services, is thinking exactly that. The retirement industry, which he says is siloed, slow-moving and over-regulated, could be revolutionized by onchain wallets that hold 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 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," Crossley said in an interview.

If regulations come into play that don't prohibit innovations, it is very likely that blockchain technology can eliminate such fragmentation of intermediaries. It's possible that industry could see a supply of wallets that "unlock the possibility of programmable assets and securities and the ability to see all of your assets in one place and control them directly, rather than being intermediated,” he said.

“When something becomes tokenized, it becomes software. That software can be an asset, but it also could be a benefit, it also could be a liability. It could be a whole 401(k). It could be your whole DC [defined contribution] plan,” Crossley said.