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 Wall Street wirehouse's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that this process is slower than expected. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a significant development, institutional adoption takes longer than most people think.
He notes that even when major institutions like BlackRock recommend allocating 2% to 4% of their portfolio to bitcoin, fund managers have not yet acted on this advice, and it will take time. According to Back, investors do not invest overnight, and a build-up of institutional investment could take a year or even 18 months.
He also mentions that the regulatory environment, particularly in the US, has improved under the current presidency, which has encouraged other jurisdictions to follow suit. Back points out that the establishment of bitcoin ETFs has the power to transcend administrations and that major financial institutions will defend their bitcoin-related businesses. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. Back notes that even if this cycle is breaking, the expectation of a price slide can become a self-fulfilling prophecy.
However, he believes that institutional flows, such as those from ETFs, sovereign wealth funds, and direct investments, will eventually overwhelm sellers. Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while institutions may be paying attention to this risk, it is not a immediate concern.