The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been viewed 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. According to Back, the introduction of bitcoin ETFs is a significant development, but its impact will not be immediate.
He notes that investors do not make sudden decisions, and a build-up of investment can take up to a year or even 18 months. Back also points out that the regulatory environment, particularly in the US, has improved with the introduction of a new legislative framework for crypto, which has encouraged other jurisdictions to follow suit.
The establishment of bitcoin ETFs, he believes, will have a lasting impact that transcends administrations, with major financial institutions like BlackRock and Morgan Stanley defending their business interests in the bitcoin market. Additionally, Back discusses the cyclical nature of bitcoin's price, driven by the quadrennial halving event, and the potential for institutional flows to eventually overwhelm sellers.
He also addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks. Overall, Back's assessment is that there is a tailwind in the bitcoin market, driven by institutional investment and improving regulatory frameworks.