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 crypto 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 and rumored to be the pseudonymous creator of bitcoin, Satoshi Nakamoto, believes that while bitcoin ETFs are a significant development, institutional adoption is a gradual process. "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 immediately invest; instead, the build-up can take up to a year or 18 months.
"Some of that stuff is just starting to happen, and it will happen slowly. So I think there's a tailwind," he added. Back's company, Blockstream, offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients.
He is also the CEO and co-founder of BSTR, a bitcoin treasury company planning to go public via a SPAC merger. The impact of the US presidency on the crypto industry has been significant, with the current administration introducing a new legislative framework for crypto and launching its own token shop. This has encouraged other jurisdictions to follow suit, with the UK's FCA approving ETFs for retirement accounts.
While the US presidency may change, the established bitcoin ETFs have the power to transcend administrations, with companies like BlackRock and Morgan Stanley defending their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event, which reduces the supply of new tokens by 50%. Even if this cycle is breaking, there is still a possibility of a price slide due to market expectations.
However, with institutional flows, such as ETFs and sovereign investments, and investors buying bitcoin directly, the market is likely to see strength. Quantum computing has also been a topic of discussion, with some claiming it could break Bitcoin's cryptography. However, Back believes that the impact of quantum technology on bitcoin's price is overstated, and institutions are more concerned about tail risks than retail investors.