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 company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that this process will take longer than expected. The introduction of bitcoin ETFs is a significant positive market signal, potentially more impactful than a pro-crypto US administration, but institutional adoption is a slow process. Back notes that even when major institutions like BlackRock recommend a 2-4% allocation to bitcoin in their portfolios, the actual implementation by fund managers takes time.
This build-up of institutional investment can take up to a year or even 18 months. While the current US presidency has introduced a more crypto-friendly framework, which has encouraged other countries to follow suit, the established bitcoin ETFs have the potential to transcend political administrations. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. Despite the possibility of a price slide due to market expectations, the influx of institutional flows, including ETFs and direct investments, is likely to eventually overwhelm sellers.
Furthermore, concerns about quantum computing's potential to break Bitcoin's cryptography have been raised, but Back believes that while institutions may be paying attention to this risk, it is not a significant factor in the current market. Overall, the slow but steady influx of institutional investment into bitcoin is expected to have a positive impact on the market, despite potential challenges and uncertainties.