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 Wall Street wirehouse'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.
"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 pile in overnight, and a build-up could take a year or even 18 months. He also points out that the regulatory influence, 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.
Back believes that the established bitcoin ETFs have the power to transcend administrations and that companies like BlackRock and Morgan Stanley will defend their business interests in the bitcoin ETF. 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 addresses 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, while the influx of institutional funds into bitcoin is a positive development, it is a gradual process that will take time to materialize.