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US Treasury Secretary Yellen advises against Bitcoin for retirement savings

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US Treasury Secretary Yellen said bitcoin as a means of retirement savings would be a “very risky” move, according to Bloomberg News. informed.

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She added that it would be appropriate for Congress to “remove the danger,” suggesting that legislative changes to retirement funds, such as 401(k), could be on cards to exclude digital assets.

Fidelity Allows Bitcoin as a 401(k) Investment Option

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The largest provider of pension plans in the US, Loyalty Investmentshocked the investment world in April by announcing plans to offer its 401(k) clients the opportunity to invest in bitcoin.

“Approximately 23,000 companies use Fidelity to manage their retirement plans, and Fidelity currently manages over $11 trillion in assets.”

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The firm will allow retirees to assign up to 20% of their account balance to the leading cryptocurrency, and individual fiduciaries will be able to set their own limits on employee contributions and deductions.

Fidelity is currently building its digital asset platform, which means the option won’t be available until later this year.

Cryptocurrency advocates see this as another step towards the legitimacy of digital assets. But others have criticized the move as a terrible idea.

Senior Analyst Morningstar, Madeline Hume, said the difference between stocks and bonds in a retirement account compared to BTC is that dividends and interest payments offset the former. Bitcoin pricing is highly speculative, which “makes it ill-suited” for retirement savings.

“The lack of fundamentals and estimates makes it a poor fit for a 401(k) plan.”

BTC has outperformed every other asset in the past decade

Despite the hostile rhetoric, proponents argue that not including Bitcoin in the retirement savings program as the best-performing asset of the past decade would be overly cautious.

In 2021, founder of Compound Capital Advisors, Charlie Bilellotweeted an analysis of asset classes showing total percentage returns from 2011 to 2021.

It has shown positive annualized returns for bitcoin in all years except 2014 and 2018. In ten years, BTC’s cumulative return was 20,037,142%, which is about 37,000 times greater than that of the next best-performing asset class, the Nasdaq 100.

Asset Class Analysis Showing Bitcoin Is the Best Performing Asset
Source: @charliebilello on

Much of these gains were made early in the life cycle of BTC, when it was relatively cheap. This means that such percentage changes are unlikely to be repeated over the next ten years.

However, with +230% CAGR, it is hard to ignore Bitcoin as a vehicle for capital growth.

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