The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been viewed 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 is slower than anticipated.
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 noted that institutional adoption is a gradual process, and investors do not make overnight decisions. The build-up of investments could take up to a year or 18 months. He also pointed out that the regulatory environment, although improved under the current US presidency, still plays a significant role in shaping the industry.
The introduction of a new legislative framework for crypto and the launch of a token shop demonstrate a more crypto-friendly stance. However, the established bitcoin ETFs have the potential to transcend administrations, with major players 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 market expectations. The influx of institutional flows, including ETFs and sovereign investments, is likely to change this dynamic. Additionally, the progression of quantum-computing hardware has raised concerns about its potential impact on Bitcoin's cryptography. Back acknowledges that institutions are more systematic about risk and may be paying attention to the recent developments in quantum technology, but he believes that the information asymmetry in the market can lead to confusion and impact decision-making.