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 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 will be slower than expected. Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a significant development, institutional adoption is a gradual process.
"I think what people may have miscalculated is that institutional adoption is very slow," he stated in an interview. "So the ETFs got bought, but when BlackRock is saying they recommend 2% to 4% allocation in their general stock portfolio, the fund managers haven't done that yet.
And they will, but it's slower than people anticipate." Back emphasizes that investors do not make decisions overnight, and a build-up of investment could take up to a year or 18 months. He also points out that the regulatory environment, particularly in the US, has improved, with the current presidency introducing a new legislative framework for crypto and launching its own token shop. This has encouraged other jurisdictions to follow suit, such as the UK's FCA approving ETFs for retirement accounts.
The establishment of bitcoin ETFs has the power to transcend administrations, with providers like BlackRock and Morgan Stanley likely to defend their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
While some commentators believe this cycle may be breaking, Back suggests that the possibility of a price slide remains due to expectations. However, with institutional flows, such as ETFs and sovereign investments, and companies like MicroStrategy buying bitcoin, the market is likely to see strength.
Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while institutions may be paying attention to the risk, it is not a significant factor in the current market. Overall, Back's insights provide a nuanced view of the institutional investment landscape and the factors influencing bitcoin's price.