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 capabilities of the Wall Street wirehouse'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, their impact will not be immediate.
In an interview with Coindesk, he noted that institutional adoption is a slow process, and even with BlackRock recommending a 2-4% allocation of bitcoin in their general stock portfolio, fund managers have yet to act, and this will take time. According to Back, investors do not rush into the market overnight, and a buildup of investment could take up to a year or 18 months. He also points out 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.
Back also discussed the cyclical nature of bitcoin's pricing, driven by the quadrennial halving event, which cuts the supply of new tokens by 50%. He acknowledges that even if this cycle is breaking, there is still a possibility of a price slide due to market expectations. However, with the influx of institutional flows, such as ETFs, sovereign and sovereign wealth fund investments, and direct purchases of bitcoin, the market is likely to see strength and stability.
Additionally, Back addressed concerns about quantum-computing hardware and its potential to break Bitcoin's cryptography, stating that while institutions may be paying attention to this risk, it is not a significant concern at present.