The recent involvement of Morgan Stanley in the US spot bitcoin ETF 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 has a more cautious outlook, stating that the process of institutional adoption is slower than most people realize and will not have an immediate impact.
Back notes that while bitcoin ETFs are a significant development, it takes time for fund managers to allocate the recommended 2-4% of their portfolio to bitcoin, and this build-up could take up to a year or 18 months. He believes that investors do not make overnight decisions and that the growth of institutional investment will be a gradual process.
Back 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 has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts.
The establishment of bitcoin ETFs has given the industry new allies in companies like BlackRock, Morgan Stanley, and Fidelity, which will defend their business interests and apply pressure to maintain a favorable regulatory environment. Additionally, Back discusses the cyclical nature of bitcoin's price, driven by the quadrennial halving event, and the potential for a price slide due to market expectations. He notes that institutional flows, such as ETFs and sovereign investments, are changing the market dynamics and will eventually overwhelm sellers.
Back also addresses concerns about quantum computing's potential impact on bitcoin's cryptography, stating that while it is a factor, it is not an immediate concern and institutions are more systematic about assessing and mitigating risks.