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 its $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 and recently rumored to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto, which he denies, believes that while bitcoin ETFs are a significant development, their impact will not be immediate. In an interview with Coindesk, Back stated that institutional adoption is a gradual process, with fund managers yet to allocate the recommended 2% to 4% of their portfolios to bitcoin.
This build-up could take up to a year or 18 months, according to Back. He attributes the slow pace to the fact that investors do not pile in overnight, but rather, it is a slow and deliberate process. Back also notes that the regulatory environment, particularly in the US, has improved under the current presidency, which has introduced a new legislative framework for crypto and launched its own token shop. This, in turn, has encouraged other jurisdictions to follow suit.
The establishment of bitcoin ETFs, Back argues, has the power to transcend administrations and will likely be defended by major financial institutions such as BlackRock and Morgan Stanley. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event, which reduces the supply of new tokens by 50%. While some commentators believe this cycle may be breaking, Back suggests that the price could still slide due to market expectations. However, he believes that institutional flows, such as ETFs and sovereign wealth fund investments, will eventually overwhelm the sellers.
Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while it may be a factor, there is a lot of information asymmetry in the market, and institutions are more systematic about assessing and mitigating risks.