Trump will allow private equity, real estate, cryptocurrency and other alternative assets in 401(k)s

This is huge. 401(k)s manage over 8 trillion, and a big part of the S&P 500’s rise is likely due to constant inflows from these pensions. If they now allow crypto, real estate or private equity, the same automatic buying pressure could inflate those assets just like it did with the index.

Most people underestimate the effect that passive flows have on asset prices. When money goes into a 401(k), it does not sit still. It gets allocated automatically in many cases into predefined funds. The most common destination is broad index funds, especially those tracking the S&P 500. That means, regardless of whether Apple, Microsoft or Nvidia are overvalued, money keeps flowing in and buying them simply because they are large and part of the index. The result is a feedback loop. Prices go up because people are buying, and people are buying because their retirement plans are designed to do it for them. No analysis, no valuation check, just mechanical flows repeating every month.

This mechanism has created years of steady upward pressure on the biggest names in the market. Many investors believe they are diversified just because they are in an index fund, but in reality they are mostly exposed to the same top companies that dominate the index by weight. This is not a free market dynamic, it is a system driven by design and regulation.

Now imagine if even a small percentage of that eight trillion starts flowing into alternative assets. The effect could be dramatic. These are markets with lower liquidity and much smaller capitalizations compared to the S&P 500. If crypto becomes accessible through 401(k)s, the amount of new demand could push prices far beyond current levels. The same goes for private equity and real estate investment funds. The demand does not need to be huge to cause a reaction. When money flows in consistently without regard for valuation, price becomes a function of flow, not fundamentals.

It also changes perception. When something becomes eligible inside a 401(k), it gains legitimacy. People who would never open a crypto wallet or invest in private equity may now consider it just because it is part of their retirement plan. That opens the door to wider adoption and even more inflows. We could be at the start of a new cycle, where assets that were once considered too risky or too exotic start behaving like traditional investments simply because the structure forces buying over time.

This kind of structural change is not just a regulatory footnote. It has the power to reshape markets completely. If the same mechanism that inflated the S&P 500 is applied to other asset classes, expect the same outcome. Passive, automatic, price-insensitive buying will find its next targets.