Morgan Stanley's recent entry into the US spot bitcoin ETF market has been perceived by some as a catalyst for ending the current crypto bear market, given the vast distribution power of its $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that progress will be slower than expected. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development for positive market signals, institutional adoption takes time. "I think what people may have miscalculated is that institutional adoption is very slow," Back stated in an interview.
He predicts that a build-up of investment could take up to a year or 18 months, adding that "some of that stuff is just starting to happen, and it will happen slowly. So I think there's a tailwind." Back also notes that the regulatory environment, particularly in the US, has improved under the current presidency, which has introduced a new legislative framework for crypto and launched its own token shop. This shift has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts.
The establishment of bitcoin ETFs, backed by major players like Black Rock and Morgan Stanley, is expected to transcend administrations and defend their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. While some commentators believe this cycle may be breaking, Back suggests that the logic of price slides will only change when people see strength in the market, driven by institutional flows and investors buying bitcoin directly or shares in bitcoin treasury companies. Additionally, Back addresses concerns about quantum-computing hardware's potential to break Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks, while retail investors may be less concerned.