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 cryptocurrency 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 and rumored to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto, believes that while bitcoin ETFs are a crucial development for positive market signals, the impact will not be immediate. "I think what people may have miscalculated is that institutional adoption is very slow," Back stated in an interview.
He notes that even with recommendations from major institutions like BlackRock for a 2% to 4% allocation in stock portfolios, fund managers have not yet acted, and this process can take up to a year or 18 months. The gradual build-up of institutional investment, coupled with the newly introduced legislative framework for crypto in the US, is expected to create a favorable environment for bitcoin. Back also points out that the presence of major financial institutions like BlackRock and Morgan Stanley in the bitcoin ETF market will help defend the business against potential regulatory interference, providing bitcoin with new, powerful allies.
Furthermore, the cyclical nature of bitcoin, driven by the quadrennial halving event, is another factor influencing its price. While some believe this cycle may be breaking, Back suggests that the logic of price movements will only change when strength in the market becomes apparent, driven by institutional flows and direct investments in bitcoin. Additionally, concerns about quantum computing's potential to break Bitcoin's cryptography have been addressed by Back, who believes that while institutions may pay attention to such risks, the impact on the price of bitcoin is not immediate. Overall, Back's insights highlight the complex interplay of factors influencing the bitcoin market, from institutional investment and regulatory environments to technological advancements and market cycles.