Bitcoin Might Be a Good Option in Retirement Accounts: Here’s All About Retiring with Crypto
Key Insights
- An approved Bitcoin ETF is expected to attract huge demand and cause a Bitcoin price explosion.
- These new ETFs will make BTC accessible for retirement accounts like IRAs and 401(k)s
- According to data from ICI Global, directing just 1% of the current US retirement assets into Bitcoin could nearly double its market cap.
- This highlights a lot of room for growth in BTC and in the portfolios of investors who choose to add it to their retirement plans.
- Overall, BTC is an excellent asset class to consider adding to any retirement account
Bitcoin, the most popular cryptocurrency in the world, has been rising steadily in price for more than a year now.
However, things are about to become much, much better for it — and for the general crypto market at large.
In the US, a new kind of investment fund called a spot ETF or Spot Exchange Traded Fund is about to be approved by the SEC, and analysts have had nothing but positive things to say about how Bitcoin's future price.
Sure, regular investors are bound to make a lot of profit from this new development in one way or another.
But what about investors planning towards retirement? Is BTC worth considering at this time?
Let's find out.
Into The World Of Spot Bitcoin ETFs
A BTC ETF is a type of investment fund that tracks the price of Bitcoin and trades on a regulated stock exchange.
Think of it as a much safer, much more regulated substitute to BTC that can be bought by investors, instead of the actual deal.
This "substitute" then allows investors to rest easy, without having to worry about things like Bitcoin's crazy price changes within minutes, how to keep private keys safe, and all of the (sometimes annoying) risks that come with buying actual BTC.
Because a new ETF will remove most of Bitcoin's risks, an approved spot BTC ETF is bound to pull in millions (if not billions) of investors from every sector, thus creating heavy demand for this scarce cryptocurrency.
Scarcity + heavy demand = a price explosion, and Bitcoin's price will inevitably skyrocket within a few years.
This all sounds too good to be true. And maybe it is. Because this price explosion will likely not happen overnight.
Bitcoin, The Upcoming ETFs And Retirement
One of the biggest benefits of a new BTC ETF is that its use cases will also increase.
For example, a spot BTC ETF is bound to make it possible for investors to add the cryptocurrency to their retirement accounts.
It so happens that these kinds of retirement accounts include:
- Individual retirement accounts (IRAs)
- 401(k) plans.
IRAs or individual retirement accounts, allow individuals to contribute a fixed limit every year, and invest it in various assets including equities, bonds, mutual funds, and exchange-traded funds (ETFs).
401(k)s on the other hand, are typically offered by employers and allow individuals to contribute a fixed percentage of their salary (rather than direct contribution as we have seen in IRAs).
In general, a new Bitcoin ETF opens the door for both IRA and 401(k) retirees to take out a small portion of their retirement funds, and buy this regulated, less risky substitute to BTC.
Investors saving up for retirement can then worry less about things like market volatility, inflation, and currency devaluation.
Moreover, Bitcoin's price will also grow over time, allowing workers to retire to a life of luxury, with a retirement portfolio worth several times its original value.
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What It Means To Be A Late Majority Holder
Late majority holders by definition, are people who adopt something (BTC in this case) after the majority of the market has already done so.
Because of this, people interested in BTC as a retirement plan will likely be part of this percentile.
However, things aren't all bad, because a poll conducted by the New York Digital Investment Group (NYDIG), indicates that 46 million Americans, or around 17% of the adult population, currently hold some Bitcoin.
This means that there is strong demand and opportunity for BTC in retirement plans because 53% of respondents confirmed that they would consider including BTC in their retirement accounts.
This indicates that BTC as part of retirement plans was already popular, long before the upcoming ETFs ever made them so.
A lot of retirees are already considering it as we speak.
How Big Is The Opportunity Of Bitcoin In Every Retirement Account?
The simple answer is that the opportunity is a very huge one indeed.
Given the massive amount of money set to flow into the Bitcoin market over the coming years, BTC presents a massive opportunity for every retiree.
As of the end of 2023, the Investment Company Institute (ICI) estimates that the total assets in the US retirement market were about $35.7 trillion, of which $11.2 trillion were in IRAs and $6.5 trillion were in 401(k) plans.
Think about this for a moment:
The demand for Bitcoin would increase by $357 billion if only 1% of these assets were allocated to it. This is nearly half of Bitcoin's current market cap, which sits at around $800 billion at the time of writing.
Of course, not every retirement account holder will invest in Bitcoin, and not every Bitcoin investor will use a retirement account.
However, the undeniable truth is that Bitcoin has a lot of potential to grow, and it could potentially increase the value of retirement accounts by several times their original value in as little as two to five years.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.