The S&P500 is a core index to gauge the financial health of the US, and covers almost US$50T in value. If you would have invested $1000 in 1957, it'd be worth over $80k today, adjusted for inflation. Most investment performance is benchmarked to the S&P500.
Many people have a stake in the S&P 500. You might invest in it directly through an ETF, or as part of an investment portfolio. If you have a pension fund from work, whether private or public, such as some US State or Canadian pension funds, you're likely impacted by the price of the S&P500. It's an easy, safe way to invest in the growth of the US.
We treat the S&P500 as an indicator of value creation. Its constituents create things, whether they're primarily physical (Apple, Nvidia, Walmart, Amazon, Coca-Cola, GE) or primarily digital (Google, Meta, Netflix, Visa). Whether or not the things they create are good (social media algorithms, fossil fuels, tobacco, diabetes), they do create products and services.
Last month, the cryptocurrency exchange Coinbase joined the list. They make money by charging fees on cryptocurrency trades, so the value of the company directly depends on people trading cryptocurrencies
The value of the S&P500, and maybe the value of your pension fund, is now directly influenced by the (perceived) value of cryptocurrencies. Bitcoin, as well as "memecoins" (which are explicitly marketed as a joke) like Trump's and Melania's have, in effect, made it into the retirement accounts of millions of people.
Cryptocurrency's value proposition, especially long-term, is far from certain. Marketplaces in general can lose value when people buy or sell less, or if access is reduce (i.e., through regulation).
Virtually everyone who bought Trump's memecoin lost money. They're probably less likely to trade cryptocurrency in the future. Reduced trading means a reduced value of Coinbase, which means pension funds get a bit less valuable.
Mark Twain famously said: “During the gold rush its a good time to be in the pick and shovel business”. What happens when the gold is gone and no one is buying shovels?