The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a pivotal moment that could mark the end of the current cryptocurrency bear market, given the vast distribution power of the company'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 and rumored to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto, emphasizes that while bitcoin ETFs are a crucial development for positive market signals, their impact will not be immediate. In an interview with Coindesk, Back noted that institutional adoption is a gradual process, often taking longer than expected.
He mentioned that even when major institutions like BlackRock recommend a 2% to 4% allocation of bitcoin in their portfolios, the actual implementation by fund managers can be slow. According to Back, this build-up could take up to a year or 18 months, and while some progress is being made, it will happen at a slower pace than many anticipate.
Back also touches on the regulatory environment, suggesting that the current crypto-friendly presidency in the US has indirectly encouraged other jurisdictions to adopt a more open approach to cryptocurrency. He believes that the establishment of bitcoin ETFs, now supported by major players like BlackRock and Morgan Stanley, will defend their business interests and ensure that the 'open for business' stance on crypto remains, regardless of future administrations. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Back points out that even if this cycle is breaking, the expectation of a price slide can become a self-fulfilling prophecy. However, with the influx of institutional flows, such as ETFs and sovereign wealth fund investments, the market is likely to see strength, eventually overwhelming sellers. Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, suggesting that while institutions may pay attention to such risks, the impact on the price of bitcoin is often due to information asymmetry and uncertainty among investors.