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 company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process will take longer than expected. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development in terms of positive market signals, institutional adoption is a slow process.
He notes that even when major institutions like BlackRock recommend a 2-4% allocation of their portfolio to bitcoin, the actual implementation takes time. According to Back, investors do not invest overnight, and the build-up of institutional investment could take up to a year or 18 months. Back also points out that the regulatory environment in the US has improved under the current presidency, which has introduced a new legislative framework for crypto and launched its own token shop.
This, in turn, has encouraged other countries to follow suit. The establishment of bitcoin ETFs, Back argues, has the power to transcend administrations and will likely be defended by major financial institutions like BlackRock and Morgan Stanley.
Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. While some commentators believe that this cycle may be breaking, Back suggests that the price may still be affected by expectations of a slide. However, he believes that institutional flows, such as those from ETFs, sovereign wealth funds, and investors buying bitcoin directly, will eventually overwhelm the sellers.
Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while institutions may be paying attention to the issue, it is not a significant factor in the current market. Overall, Back's assessment is that while institutional investment in bitcoin is forthcoming, it will take time to materialize, and the market will be influenced by a combination of factors, including regulatory developments, institutional flows, and the cryptocurrency's cyclical nature.