The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a catalyst for ending 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 institutional adoption is a slow process. In an interview with Coindesk, Back noted that while bitcoin ETFs are a significant development, it takes time for institutional investors to allocate funds. Even with recommendations from major players like BlackRock, fund managers have not yet adjusted their portfolios.
This process can take up to a year or 18 months. Back emphasizes that investors do not invest overnight, and a build-up of investments will occur gradually, creating a positive market trend. The Trump administration's crypto-friendly stance has also contributed to a more favorable regulatory environment.
Despite the potential for changes in government, the establishment of bitcoin ETFs has created a lasting impact, with major financial institutions now invested in defending their bitcoin-related businesses. 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 expectation of a price slide can become a self-fulfilling prophecy.
However, with the influx of institutional flows and investors buying bitcoin, 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 it may be a factor, it is not an immediate concern. Institutions, however, are more systematic about risk and may consider this a tail risk worth exploring.