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 the process will be slower 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 gradual process. He notes that even with recommendations from major players like BlackRock, fund managers have not yet adjusted their portfolios accordingly, and this shift will take time, potentially up to a year or 18 months.
The build-up of institutional investment is just beginning and will unfold slowly, creating a tailwind for the market. Back also discusses the impact of regulatory environments, citing the improvement in the US framework for crypto under the current presidency, which has encouraged other jurisdictions to follow suit. The establishment of bitcoin ETFs, now backed by major financial institutions, is expected to transcend political administrations, with these institutions likely to defend their interests in the bitcoin market. Back also touches on the cyclical nature of bitcoin, driven by the halving event, and the potential for price fluctuations based on market expectations.
The influx of institutional flows, including sovereign investments and direct bitcoin purchases, is expected to eventually overwhelm sellers, driven by recurring buyers and new institutional investors. Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, suggesting that while it may be a consideration for institutions, it is not an immediate threat.