Fidelity revealed plans Tuesday to let people allocate bitcoin to their 401(k)s , in one of the most important developments for the cryptocurrency. The announcement may not immediately impact bitcoin in prices or inflows. First, employers will need to adopt it as an offering for their employees . Analytics firm MicroStrategy will be the first to make the jump. Still, this move by the largest U.S. provider of retirement plans establishes bitcoin as a mainstream investment asset (versus a digital currency, at least in the U.S.) and lowers retail investors' barrier to entry. "This move by Fidelity further enforces the idea that digital assets are here to stay," said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. "We now have countries, pensions, family offices and now a massive institutional player in the retirement space allowing access. It speaks to the growth prospects of this asset class." She added that cryptocurrencies are getting hit as part of the broader market sell-off, but said these dips "are longer term opportunities, and the Fidelity news only adds to that macro adoption picture." The announcement comes as the long-term thesis for investing in the cryptocurrency is strengthening. Bitcoin's key indicators – like supply of bitcoin held for more than a year, or bitcoin held in addresses that spend less than 25% of their incoming bitcoin – has been climbing. And increasingly, individuals have been reassessing the value and role of government-issued money amid geopolitical turmoil in Ukraine, rising rates and inflation. "Bitcoin is a finite asset, with only 21 million that will ever exist. Fixed supply and increased demand by trillions of dollars is an easy recipe for upward pressure," said Chris Kline, chief operating officer and co-founder at Bitcoin IRA. "Fidelity has likely been working on this for some time and could have a major impact on the future of increasing access for this emerging asset class. While this may not be having a direct effect on the price of bitcoin and other cryptos today, it can certainly act as the catalyst for a rally later this year." Lowering the barrier for retail investors Fidelity could open up the flood gates to a host of new investors and new inflows. Even if they're small, it would still be a lot of buying power. "A couple years ago 2% was the gold standard of how much you should hold in digital assets for your portfolio," said Katie Talati, director of research at crypto asset manager Arca. "You could go and say, I have $100,000 retirement portfolio and I want to put 2% of that into bitcoin. That's modest, but if you multiply that by the millions of people with retirement accounts, it really becomes very impactful." Riyad Carey, a research analyst at Kaiko, said on its face, the announcement is a bigger deal than any spot bitcoin ETF, none of which have yet been approved but have been widely regarded as a future game changer for giving retail investors easy and safe exposure to bitcoin. "Anybody who's buying bitcoin through an ETF probably doesn't care if it's spot or futures, if you care about the underlying mechanism, you're probably going to buy it through an exchange and maybe custody it yourself," Carey said. Fidelity's offering will probably be most attractive to a new type of retail investor, one that's been sitting on the sidelines waiting for an easier way or a more familiar name. Or one who doesn't have excess cash to invest in bitcoin at the end of the day. "The audience of people that will buy it are people that feel overwhelmed trying to buy bitcoin on their own, having to open up an account at Coinbase or FTX, which are not household names to the broad American public," said Henry Yoshida, cofounder and CEO of Rocket Dollar, a company that helps people hold alternative assets in their retirement accounts. "Maybe the younger people today, digital natives, the tech savvy, but probably not broadly if you're taking into account the whole United States. It'll be these groups of people that will take advantage of it, if the plan sponsor allows it." Institutional dominance in crypto The bitcoin market has been dominated by institutional investors for a little over a year, as investing legends began endorsing the cryptocurrency and corporate buying of bitcoin began ramping up. The cryptocurrency has been trading like a tech stock ever since. Meanwhile, retail interest has hit a lull. Bitcoin is about 44% down from its all-time high of about $68,000, but its moves have been confined to a tight range all year. "There's very low volatility and not surprisingly that translates into a reduction in retail interest," Bitwise chief investment officer Matt Hougan recently told CNBC's "Crypto World. Meanwhile, "institutional interest is like a freight train, it just keeps going. There is nothing that stops it," Hougan added. "We have conversations with pensions, family offices and hedge funds and the volume of those conversations has increased dramatically over the last six months. There's been nothing about the flatlining of prices that has slowed down that progress." Making bitcoin easier to access for retail investors could change that dynamic, according to Yoshida. "It puts the power of bitcoin into the hands of individuals," he said. "[Bitcoin] ultimately won't be subject to the whims and big swings of an institutional investor buying blocks, either in or out."
