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 network of the Wall Street wirehouse's $8 trillion wealth management division. However, Blockstream CEO Adam Back has cautioned that the process is slower than expected.
Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a significant development, institutional adoption will take longer than anticipated. "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 recommends a 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." The build-up of institutional investment could take up to a year or 18 months, according to Back. Founded in 2014, Blockstream offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients.
Back also serves as the CEO and co-founder of BSTR, a bitcoin treasury company. The impact of regulatory influences, such as the crypto-friendly presidency of Donald Trump, has also been a factor in the industry's growth. The introduction of a new legislative framework for crypto and the launch of a token shop have contributed to a more favorable business environment. While the US presidency may be open for crypto business, the established bitcoin ETFs have the power to transcend administrations, Back pointed out.
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. Even if this cycle is breaking, there is still the possibility of a price slide due to market expectations. However, institutional flows, such as ETFs and sovereign wealth fund investments, are likely to change this logic and bring strength to the market.
Back also addressed concerns about quantum-computing hardware and its potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks. Overall, while progress may be slower than anticipated, the influx of institutional investment and the growth of the bitcoin market are expected to continue.