The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been viewed by some as a pivotal moment that could potentially bring an end to the current cryptocurrency bear market, given 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 many expect. Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a crucial positive market signal, possibly even more significant than a pro-crypto US administration, the impact will not be immediate. "I think what people may have miscalculated is that institutional adoption is very slow," Back 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." He emphasizes that investors do not rush into investments overnight and that a build-up could take up to a year or even 18 months.
Back also points out that regulatory influences, such as those from President Donald Trump's crypto-friendly term, have indirectly encouraged other jurisdictions to adopt more open frameworks for crypto. The establishment of bitcoin ETFs, now supported by major financial institutions like BlackRock and Morgan Stanley, is expected to have a lasting impact that transcends political administrations. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Despite the possibility of the four-year cycle breaking, there's still a reasonable chance of price fluctuations due to market expectations. However, with institutional flows, such as ETFs and sovereign investments, and the growth of companies like MicroStrategy, which enable investors to buy bitcoin in various market conditions, the market is expected to see strength. Back also addresses concerns about quantum computing's potential to break Bitcoin's cryptography, suggesting that while it may be a factor for institutions considering long-term risks, it is not an immediate concern for the price of bitcoin.