The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a catalyst for ending 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 the process is slower than many people think. Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a crucial development for positive market signals, their impact will not be immediate. According to Back, institutional adoption is a gradual process, and investors do not immediately invest large sums.
He estimates that a build-up of investment could take a year or even 18 months. Back also points out that the regulatory environment has improved, with the current US presidency introducing a new legislative framework for crypto and launching its own token shop. This has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts.
The establishment of bitcoin ETFs has the power to transcend administrations, with providers like Black Rock and Morgan Stanley likely to defend their business interests. Another factor to consider is bitcoin's cyclical nature, driven by the quadrennial halving event, which can lead to a bull run followed by a bear market. Back believes that the logic of price slides will change when people see strength in the market, driven by institutional flows and investors buying bitcoin directly or through shares in bitcoin treasury companies.
He also addresses concerns about quantum-computing hardware progressing faster than expected and its potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks.