The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been seen by some as a catalyst to end the current cryptocurrency bear market, given the vast distribution capabilities of the Wall Street wirehouse's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that the process is slower than most people think. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development for positive market signals, their impact will not be immediate. In an interview with Coindesk, Back stated that institutional adoption is a gradual process, and investors do not invest overnight.
The build-up of investments could take up to a year or 18 months. He also mentioned that some of this growth is just beginning to happen and will occur slowly, creating a tailwind for the market. Founded in 2014 by Back and other prominent Bitcoin developers, Blockstream offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients.
Back is also the CEO and co-founder of BSTR, a bitcoin treasury company planning to go public via a SPAC merger with Cantor Equity Partners. The current US presidency has introduced a new legislative framework for crypto and launched its own token shop, creating a more favorable business environment. This has encouraged other countries to follow suit, such as the UK's FCA approving ETFs for retirement accounts. Back notes that the established bitcoin ETFs have the power to transcend administrations, whether Republican or Democrat, and that companies like Black Rock and Morgan Stanley will defend their business interests in the bitcoin ETF market.
Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. Even if this cycle is breaking, there is still a possibility of a price slide due to market expectations.
However, institutional flows, such as ETFs, sovereign investments, and direct bitcoin purchases, are likely to change this logic and create market strength. Back also addressed concerns about quantum-computing hardware progressing faster than expected and its potential impact on Bitcoin's cryptography, stating that institutions are more systematic about risk and will consider even small tail risks.
Overall, while the influx of institutional investment in bitcoin is forthcoming, it is a gradual process that will take time to develop.