The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a potential catalyst for ending the current crypto bear market, given the vast distribution power of the company's $8 trillion wealth management network. However, according to Blockstream CEO Adam Back, an early contributor to the Bitcoin community, this process will take longer than anticipated. Back notes that while bitcoin ETFs are a crucial development for positive market signals, institutional adoption is typically slow.
He cites the example of BlackRock recommending a 2-4% allocation of bitcoin in their general stock portfolio, but points out that fund managers have yet to act on this recommendation. Back estimates that a build-up of institutional investment could take up to a year or 18 months. Despite this, he believes there is a 'tailwind' in the market.
Back also discusses the impact of the current US presidency on the crypto industry, suggesting that the introduction of a new legislative framework for crypto has indirectly encouraged other jurisdictions to follow suit. He notes that the establishment of bitcoin ETFs has the power to transcend administrations, with major financial institutions like BlackRock and Morgan Stanley likely to defend their business interests in the market. Additionally, Back touches on the cyclical nature of bitcoin's price, driven by the quadrennial halving event, and the potential for a price slide due to market expectations. However, he believes that institutional flows, such as those from ETFs and sovereign wealth funds, will eventually overwhelm sellers.
Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, suggesting that while institutions may be paying attention to this risk, it is not a major factor in the current market.