The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a catalyst for ending the current crypto bear market, given the vast distribution power of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back, a renowned figure in the Bitcoin community, cautions that the process is slower than anticipated. Back, who has been speculated to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto, emphasizes that 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. The introduction of bitcoin ETFs is a crucial development, but it will take time for fund managers to allocate the recommended 2-4% of their portfolios to bitcoin. This build-up could take up to a year or 18 months, according to Back. The impact of regulatory influences, such as the US presidency's stance on crypto, also plays a role in shaping the industry.
The current administration's crypto-friendly approach has indirectly encouraged other jurisdictions to follow suit. Back notes that the establishment of bitcoin ETFs has the power to transcend administrations, with major players like BlackRock and Morgan Stanley likely to defend their business interests.
Another factor to consider is bitcoin's cyclical nature, driven by the quadrennial halving event, which can lead to a bull run followed by a bear market. The influx of institutional flows, including ETFs and sovereign investments, is expected to eventually overwhelm sellers. Back also addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while it may be a factor, it is often exaggerated and institutions are more systematic about assessing risks.
Overall, while progress may be slower than expected, the influx of institutional investment in bitcoin is expected to have a positive impact on the market.