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 is slower than anticipated. 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," he said in an interview.
The process of fund managers allocating 2% to 4% of their portfolios to bitcoin, as recommended by BlackRock, is ongoing but gradual. According to Back, this build-up could take up to a year or 18 months, and while some progress is being made, it will happen slowly.
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 has encouraged other jurisdictions, such as the UK, to follow suit.
The establishment of bitcoin ETFs, backed by major institutions like BlackRock and Morgan Stanley, is expected to transcend administrations and provide a stable foundation for the market. 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 possibility of a price slide remains due to market expectations. However, with the influx of institutional flows, such as ETFs and sovereign investments, the market is likely to see strength and stability.
Back also addressed concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while institutions may be paying attention to the risk, it is not a significant factor in the current market. Overall, Back's assessment is that the bitcoin market will experience a gradual increase in institutional investment, leading to long-term growth and stability.