The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been viewed by some as a catalyst for ending the current crypto bear market, given the vast distribution capabilities of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that this process is slower than many people think. Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a significant development, institutional adoption takes longer than anticipated.
"I think what people may have miscalculated is that institutional adoption is very slow," Back stated in an interview. He believes that the build-up of investment could take up to a year or even 18 months. The arrival of institutional investors, including those from BlackRock, will eventually have a positive impact on the market, but it will be a gradual process. The regulatory environment, influenced by the current US presidency, has also improved, with a new legislative framework for crypto and the launch of a token shop.
This shift has encouraged other jurisdictions to follow suit, with the UK's FCA approving ETFs for retirement accounts. Back also points out that the established bitcoin ETFs have the power to transcend administrations, with major providers like BlackRock and Morgan Stanley likely to defend their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
While some commentators believe this cycle may be breaking, Back suggests that the logic of price slides will only change when people see strength in the market, driven by institutional flows and investors buying bitcoin directly or through shares in bitcoin treasury companies. Additionally, Back addresses concerns about quantum-computing hardware and its potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks, but the recent quantum doomsaying may have institutions paying attention.