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 Wall Street wirehouse's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that this process will take longer than expected. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development for positive market signals, institutional adoption is a slow process. "I think what people may have miscalculated is that institutional adoption is very slow," Back 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 of investment can take up to a year or 18 months. He also points out that the regulatory environment, 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 notes that the establishment of bitcoin ETFs has the power to transcend administrations 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 can lead 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 while it may be a factor, institutions are more systematic about risk and will consider even small tail risks.
Overall, Back believes that the influx of institutional investment, including ETFs, sovereign wealth funds, and direct investment in bitcoin, will eventually overwhelm sellers and drive up the price of bitcoin.