The recent involvement of Morgan Stanley in the US spot bitcoin ETF market has been viewed by some as a catalyst for ending the current cryptocurrency bear market, given the vast distribution power of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back has cautioned that this process will take longer than anticipated.
In an interview with Coindesk, Back stated that while bitcoin ETFs are a significant development, institutional adoption is typically slow. He noted that even if major financial institutions like BlackRock recommend allocating 2% to 4% of their portfolios to bitcoin, fund managers have yet to implement this change, and it will occur at a slower pace than expected.
Back emphasized that investors do not immediately invest large sums, and a build-up of investment could take up to a year or 18 months. He believes that this gradual investment will create a positive market trend.
Back also discussed the impact of regulatory influences on the cryptocurrency market, citing the US presidency's introduction of a new legislative framework for crypto and the launch of its own token shop. He suggested that this has encouraged other jurisdictions to follow suit, such as the UK's Financial Conduct Authority approving ETFs for retirement accounts. According to Back, the established bitcoin ETFs have the power to transcend administrations, and major financial institutions like BlackRock and Morgan Stanley will defend their business interests in the bitcoin market. He also touched 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.
Nevertheless, Back remains optimistic, citing the growing strength of institutional flows, such as ETFs, sovereign investments, and investors buying bitcoin directly or shares in bitcoin treasury companies. He also addressed concerns about quantum computing's potential impact on bitcoin's cryptography, stating that while institutions may be paying attention to this risk, it is not a significant factor in the current market.