Fri Fire: Gold & Oil Up, Bitcoin & Crypto Dive
- Crypto-economist predicts Bitcoin’s inclusion in 401(k) plans
- Krüger emphasized a holistic approach to identifying valuable crypto-projects
The approval of Bitcoin exchange-traded funds (ETFs) signified a major milestone, one that was welcomed by mostly everyone. In fact, Economist and Aike Capital founder Alex Krüger described it as,
“The perfect Trojan horse.”
In an episode of The Pomp Podcast, Krüger drew attention to the fact that this is turning Bitcoin (BTC) into a traditional finance (TradFi) asset, positioning it as a compliant player in the financial landscape. This, thereby, serves as a gateway for integrating the wider digital currency landscape into the existing system.
Bitcoin as a retirement asset
Krüger painted a compelling picture where individuals, previously unexposed to cryptocurrency, will begin to view Bitcoin as an integral component of their retirement planning strategy. He believes that the asset will likely be included in millions of 401(k) plans. This inclusion could lead many to align their views on financial dissatisfaction with the realization that Bitcoin offers an exceptional alternative to traditional financial systems.
For instance, the 2022 CFA Institute study indicated a significant trend towards crypto-adoption, with 94% of state and local pension plans reported to have some crypto-exposure. And yet, despite the interest, many employers have been hesitant to offer crypto-options in 401(k) plans, largely due to the 2022 guidance from the U.S. Department of Labor.
However, with the approval of spot Bitcoin ETFs, more providers are expected to include these options. Chris Kline, co-founder of Bitcoin IRA, commented,
“It’s a big step toward mainstream adoption of Bitcoin and cryptocurrency. (Investors) will have more options available.”
Crypto-spectrum beyond Bitcoin
Krüger offered an insightful perspective on the differentiation between Bitcoin and other cryptocurrencies. He said,
“Basically, money flows into Bitcoin, and then it trickles down into all other crypto assets.”
He categorized cryptocurrencies into different functions beyond just a store of value, including payment mechanisms and liquidity provision, which add intrinsic value to the ecosystem. Stablecoins, for example, are highlighted as assets that reduce inefficiencies in the crypto-space by offering more stability and quick settlement times.
However, Krüger underlined that stablecoins do not completely escape the regulatory framework. Authorities like the Securities and Exchange Commission (SEC) can exert control over them. He also acknowledged the speculative nature of memecoins, contending that they are not entirely without value. They cater to a gambling-like desire among investors.
Sifting through crypto for real value
When assessing the value and potential of various crypto-assets, Krüger revealed that he relies on a holistic approach. This combines technical analysis, fundamental analysis, and a macro view of the market. He emphasized the importance of the teams behind projects, looking for integrity and respect within the community rather than just market trends.
