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, given the vast distribution power of the Wall Street wirehouse's $8 trillion advisory network. However, Blockstream CEO Adam Back cautions that institutional adoption is a slow process. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a significant development, their impact will not be immediate. "I think what people may have miscalculated is that institutional adoption is very slow," Back said in an interview.
"So the ETFs got bought, but when BlackRock is saying they recommend 2% to 4% allocation in their general stock portfolio, the fund managers haven't done that yet. And they will, but it's slower than people anticipate." Back notes that investors do not rush into the market overnight and that a build-up of investment could take up to a year or 18 months.
The CEO also points out that 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, in turn, has encouraged other jurisdictions to follow suit.
While the current administration's crypto-friendly stance may be a positive factor, Back believes that the established bitcoin ETFs have the power to transcend administrations. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event, which cuts the supply of new tokens by 50%. Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks. Overall, Back remains optimistic about the future of bitcoin, citing the growing strength of institutional flows and the potential for recurring buyers to overwhelm sellers.