Institutional Investment in Bitcoin is Forthcoming, but Progress is Slower than Anticipated, According to Adam Back

The recent involvement of Morgan Stanley in the US spot bitcoin ETF has been viewed by some as a pivotal moment that could potentially bring an end to the current crypto bear market, thanks to the vast distribution capabilities of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process is slower than most people think.

Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a significant development, institutional adoption takes time. "I think what people may have miscalculated is that institutional adoption is very slow," he 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." According to Back, investors do not immediately invest; instead, the process can take up to a year or 18 months. "Some of that stuff is just starting to happen, and it will happen slowly. So I think there's a tailwind," he added.

Back also discussed the impact of the Trump administration's crypto-friendly policies and the role of regulatory frameworks in boosting the industry. He believes that the presence of bitcoin ETFs will transcend administrations and that companies like BlackRock and Morgan Stanley will defend their business interests in the bitcoin market. Back also touched on the cyclical nature of bitcoin's price, driven by the quadrennial halving event, and the potential for a price slide due to market expectations. However, he notes that institutional flows, such as ETFs and sovereign investments, will eventually overwhelm sellers.

Additionally, Back addressed concerns about quantum computing's potential to break Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks. Overall, while the influx of institutional money into bitcoin is forthcoming, it is a slow process that will take time to develop.