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 power of its $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process will take longer than anticipated. Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a significant development, institutional adoption is a slow process. He mentions that even when major institutions like BlackRock recommend a 2-4% allocation of bitcoin in their portfolios, fund managers have not yet acted on it, and it will take time.
According to Back, investors do not rush into the market overnight, and a build-up of investment can take up to a year or 18 months. He believes that the recent developments, including the launch of bitcoin ETFs, will create a tailwind for the market. Back also discusses the impact of the US presidency on the crypto industry, noting that the current administration has introduced a new legislative framework for crypto and launched its own token shop.
He suggests that the US has become more open to crypto business, which has encouraged other jurisdictions to follow suit. The establishment of bitcoin ETFs, Back argues, has the power to transcend administrations and will be defended by major providers like BlackRock and Morgan Stanley. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Back notes that even if this cycle is breaking, a price slide could still occur due to market expectations. However, he believes that institutional flows, such as ETFs and sovereign investments, will eventually overwhelm sellers.
Back also addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while it may be a factor, there is a lot of information asymmetry in the market, and institutions will think ahead to mitigate potential risks.