The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a catalyst to end the current crypto bear market, thanks to the vast distribution network of the Wall Street wirehouse's $8 trillion advisory business. However, Blockstream CEO Adam Back, an early contributor to the Bitcoin community, cautions that the process will be slower than expected. Back notes that while bitcoin ETFs are a significant development, institutional adoption is a gradual process that may take up to a year or 18 months to materialize.
He emphasizes that investors do not invest overnight, and a buildup of momentum could take time. Despite the slow pace, Back believes there is a positive trend in the market. The company he co-founded, Blockstream, offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients.
Back also serves as the CEO and co-founder of BSTR, a bitcoin treasury company planning to go public via a SPAC merger. The regulatory environment has improved under the current US presidency, which has introduced a new legislative framework for crypto and launched its own token shop.
This has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts. Back points out that the established bitcoin ETFs have the power to transcend administrations, whether Republican or Democrat, and that major players like Black Rock and Morgan Stanley will defend their business interests in the bitcoin market.
Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event, which often leads to a bull run followed by a bear market. While some commentators believe the four-year cycle is breaking, Back suggests that the possibility of a price slide remains due to market expectations. The influx of institutional flows, such as ETFs, sovereign investments, and direct bitcoin purchases, is likely to change market dynamics.
Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while institutions may be paying attention to the risk, it is not a significant concern at present.