The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been seen by some as a catalyst to end the current crypto bear market, given the vast distribution capabilities of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process is slower than expected. Back, an early contributor to the Bitcoin community, believes that bitcoin ETFs are a significant development in terms of positive market signals, but their impact will not be immediate. "I think what people may have miscalculated is that institutional adoption is very slow," Back said in an interview.
"So the ETFs got bought, but when BlackRock is saying they recommend 2% to 4% allocation in their general stock portfolio, the fund managers haven't done that yet. And they will, but it's slower than people anticipate." According to Back, investors do not make immediate decisions, and a build-up of investments could take up to a year or 18 months.
He notes that some of these developments are just beginning to happen and will progress slowly, resulting in a positive market trend. Blockstream, founded by Back in 2014, offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients. Back is also the CEO and co-founder of BSTR, a bitcoin treasury company planning 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, with companies like Black Rock and Morgan Stanley likely to defend their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. Even if this cycle is breaking, the possibility of a price slide remains due to market expectations.
However, with institutional flows and investors buying bitcoin directly or shares in bitcoin treasury companies, the market is likely to see strength and growth. 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 an immediate concern.