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 cryptocurrency bear market, given the vast distribution power of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process will be slower than anticipated.
Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development for positive market signals, institutional adoption takes longer than most people realize. In an interview with Coindesk, Back stated that investors do not immediately invest, and a buildup of investment can take up to a year or 18 months.
He also pointed out that fund managers have not yet allocated the recommended 2-4% of their portfolios to bitcoin, but this will happen gradually. Back notes that the regulatory environment has improved under the current US presidency, which has introduced a new legislative framework for crypto and launched its own token shop. This has encouraged other jurisdictions to follow suit, such as the UK's Financial Conduct Authority approving ETFs for retirement accounts. Back also mentions that the established bitcoin ETFs have the power to transcend administrations, whether Republican or Democrat, as companies like BlackRock and Morgan Stanley will defend their business interests.
Another factor to consider is bitcoin's cyclical nature, driven by the quadrennial halving event, which often leads to a bull run followed by a bear market. Back believes that the logic of a price slide will change when people see strength in the market, which is now coming in the form of institutional flows, such as ETFs and sovereign wealth fund investments.
He also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks. Overall, Back remains optimistic about the future of bitcoin, citing the growing ability of investors to buy bitcoin in different market conditions and the eventual overwhelming of sellers by recurring buyers.