The recent involvement of Morgan Stanley in 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, an early contributor to the Bitcoin community, suggests that the process is slower than anticipated.
Back, who has been tipped as the potential creator of Bitcoin, Satoshi Nakamoto, emphasizes that institutional adoption is a gradual process. The introduction of bitcoin ETFs is a significant development, but it will take time for fund managers to allocate the recommended 2% to 4% of their portfolios to bitcoin.
This build-up could take up to a year or 18 months, according to Back. The slow and steady influx of institutional investors will eventually outweigh the sellers, leading to a positive market trend. Back also highlights the impact of the current US presidency on the crypto industry, with the introduction of a new legislative framework and a more favorable business environment. The establishment of bitcoin ETFs has the potential to transcend administrations and will likely be defended by major financial institutions such as BlackRock and Morgan Stanley.
Additionally, the cyclical nature of bitcoin's price, driven by the quadrennial halving event, is another factor to consider. While some commentators believe the four-year cycle is breaking, Back suggests that the logic of price slides will only change when people see strength in the market, driven by institutional flows and investors buying bitcoin directly or through shares in bitcoin treasury companies.
The growth of institutional investment in bitcoin is expected to eventually overwhelm the sellers, leading to a positive market trend.