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 anticipated. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a crucial development for positive market signals, institutional adoption is a slow process. "I think what people may have miscalculated is that institutional adoption is very slow," Back 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." This gradual build-up could take up to a year or 18 months, according to Back. The presence of institutional investors, such as BlackRock and Morgan Stanley, will provide a tailwind for the market, as they will defend their business interests in bitcoin ETFs. Additionally, the cyclical nature of bitcoin, driven by the quadrennial halving event, is another factor to consider when evaluating market trends.
The reduction in new token supply often leads to a bull run followed by a bear market and recovery period. While some commentators believe the four-year 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, sovereign investments, and direct bitcoin purchases, will eventually overwhelm sellers and drive market strength.
Back also addressed 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 at present.