After suffering losses in the previous session, Bitcoin and Ether have made gains as investors started believing that the Iran war can end soon. These assets' prices rebounded on the latest episode of CNBC Crypto World, which included the proposal of the Labor Department regarding cryptocurrencies in 401(k) plans and marked four years of coverage of the cryptocurrency segment by the show.

A Change in the Mood and a Temporary Safe Haven for Risky Investments

There was nothing unusual behind the rally: it was just traders hoping that there may be some diplomatic developments regarding Iran. As a result, there was demand for risky investments and Bitcoin rose from its weekly low of nearly $68,000 to touch $71,000, while Ether gained back the mark of $2,250. However, when the talks between the U.S. and Iran failed to produce an extension of the ceasefire, prices dipped: both coins lost around 2%.

Is Your 401(k) Plan to Gain Access to Cryptocurrency?

Another piece of news to come from the U.S. Department of Labor is that the agency proposed to offer the "safe harbor" protection for 401(k) plan managers who add alternative assets, including cryptocurrency, into the investment menu of the plan. According to this rule, the agency stops questioning whether the particular type of assets is suitable for such a purpose and asks only whether the managers have done their homework before adding such asset to the list.

In other words, the agency requires that the managers evaluate such parameters as the fees, liquidity and transparency objectively. Then it means that the manager performs his or her duties and takes care of the best interests of the plan participants. Many experts believe that this proposal is a direct break with the approach of the previous administration.

Indeed, in 2022, the Department of Labor asked 401(k) managers not to include cryptocurrencies in the menu of assets available to the plan participants because of the volatility and speculative nature of cryptocurrencies. However, the current Deputy Secretary of Labor Keith Sonderling states that the department will remain neutral as it is not a question for the agency to determine whether the asset is appropriate for investing.

If this rule comes into effect, it will significantly change the retirement plans of many Americans as the U.S. 401(k) market equals almost $12.5 trillion. Nevertheless, it is too early for now because the rule is only being proposed and there is much work to do till then. Besides, employers will face a challenge of allocating volatile assets into the portfolios of conservative retirees.

Four Years of the Coverage of the Cryptocurrency Segment

This episode of the show was devoted to its four-year history of the coverage of the cryptocurrency market. While the early episodes covered only the exchange platforms and the excitement of retail investors, now the focus shifted to the institutional players of the market, regulation and geopolitics impacting the prices. These changes reflect the evolution of the cryptocurrency market itself.

At the moment, cryptocurrency stands on the fork in the road where global conflicts and geopolitical tensions impact the short-term dynamics, while regulators gradually unlock the door for long-term capital inflows from the pension funds. What happens next will define the risks and rewards for the investors in the upcoming period.