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, thanks to the vast distribution network of the Wall Street wirehouse's $8 trillion wealth management division. However, Blockstream CEO Adam Back cautions that progress will be slower than anticipated.
Back, an early contributor to the Bitcoin community, believes 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 pile in, and a build-up could take a year or even 18 months.
He notes that some of this is just starting to happen and will occur slowly, creating a tailwind for the market. Back also discusses the impact of the US presidency on the crypto industry, stating that the current administration has improved the regulatory framework, encouraging other jurisdictions to follow suit. The establishment of bitcoin ETFs has the power to transcend administrations, with providers like BlackRock and Morgan Stanley likely to defend their business interests. Back also touches 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 believes that institutional flows, such as ETFs and sovereign investments, will eventually overwhelm sellers. Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while it may be a factor, institutions are more systematic about risk and will consider even small tail risks.