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, notes that while bitcoin ETFs are a significant development, institutional adoption takes time.
"I think what people may have miscalculated is that institutional adoption is very slow," he 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, and a build-up could take up to a year or 18 months. He believes that some of these developments are just beginning to unfold and will happen gradually, resulting in a positive market trend.
As the CEO of Blockstream, a company offering self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients, Back also co-founded BSTR, a bitcoin treasury company looking to go public via a SPAC merger. Back attributes the current regulatory influence to the crypto-friendly presidency of Donald Trump, which has introduced a new legislative framework for crypto and launched its own token shop.
This has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts. The established bitcoin ETFs have the power to transcend administrations, with Back pointing out that providers like Black Rock will 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, there is still a possibility of a price slide due to market expectations.
However, with institutional flows and investors buying bitcoin directly or shares in bitcoin treasury companies, the market is expected to see strength. Back also addressed concerns about quantum-computing hardware progressing faster than expected and its potential to break Bitcoin's cryptography. While he believes there is information asymmetry in the market, institutions are more systematic about risk and may pay attention to potential tail risks. Overall, Back remains optimistic about the future of bitcoin, citing the growing ability of institutional buyers to purchase bitcoin in different market conditions and the eventual overwhelming of sellers.