The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been viewed by some as a potential catalyst to reverse the current crypto bear market, given the vast distribution network of the company's $8 trillion wealth management division. However, Adam Back, CEO of Blockstream and a renowned cryptographer, cautions that this process will take longer than expected. In an interview with Coindesk, Back emphasized that the adoption of bitcoin by institutional investors is a slow process. While the launch of bitcoin ETFs is a significant positive market signal, even more so than a pro-crypto US administration, the actual allocation of funds will occur gradually.
Back notes that investors do not make overnight decisions, and a buildup of investment could take up to a year or 18 months. He believes that despite the slow pace, there is a growing tailwind in favor of bitcoin.
Founded in 2014, Blockstream offers self-custody wallets, layer-2 network settlement, and asset issuance to both retail and institutional clients. Back is also the CEO and co-founder of BSTR, a bitcoin treasury company aiming to go public via a SPAC merger. The current US presidency has introduced a new legislative framework for crypto and launched its own token shop, indirectly encouraging other jurisdictions to follow suit. Back points out that the established bitcoin ETFs have the power to transcend administrations and that major financial institutions like BlackRock will defend their business interests in the bitcoin market.
Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. Although some commentators believe this cycle may be breaking, Back suggests that the possibility of a price slide remains due to market expectations. However, institutional flows, such as ETFs and sovereign wealth fund investments, are changing the market dynamics. Back also addresses concerns about quantum computing's potential impact on bitcoin's cryptography, stating that while institutions may be paying attention to this risk, it is not a pressing concern for the market.
Overall, Back remains optimistic about the future of bitcoin, citing the growing strength of institutional investment and the potential for these investors to overwhelm sellers in the market.