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, thanks to the massive distribution power of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process will take longer than anticipated.
In an interview with Coindesk, Back stated that the bitcoin ETFs are a crucial development for positive market signals, but institutional adoption is a slow process. "I think what people may have miscalculated is that institutional adoption is very slow," he said.
"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." Back believes that investors do not invest overnight and that a build-up could take up to a year or 18 months.
He also notes that the regulatory environment has improved, with President Donald Trump's crypto-friendly term and the introduction of a new legislative framework for crypto. The US now has a presidency that has launched its own token shop, and other jurisdictions are following suit.
Back pointed out that the established bitcoin ETFs have the power to transcend administrations, whether Republican or Democrat, and that companies like BlackRock and Morgan Stanley will defend their business interests in the bitcoin market. Another factor to consider is bitcoin's cyclical nature, driven by the quadrennial halving event, which often leads to a bull run followed by a bear market. Back also addressed concerns about quantum computing's potential impact on bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks.
Overall, Back is optimistic about the future of bitcoin, citing the growth of institutional flows and the increasing ability of investors to buy bitcoin in different market conditions.