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 has cautioned that the process will be slower than anticipated.
Back, an early contributor to the Bitcoin community, stated that while bitcoin ETFs are a significant development, institutional adoption is a gradual process. "I think what people may have miscalculated is that institutional adoption is very slow," he said 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." Back emphasized that investors do not make overnight decisions, and a build-up of investment could take up to a year or 18 months.
He also pointed 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.
The establishment of bitcoin ETFs, Back noted, has the power to transcend administrations and has created new allies for bitcoin in institutions such as BlackRock, Morgan Stanley, and Fidelity. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event. While some commentators believe this cycle may be breaking, Back suggested that the possibility of a price slide remains due to market expectations.
However, he believes that institutional flows, such as ETFs and sovereign investments, will eventually overwhelm sellers. Additionally, Back 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 in the current market. Overall, Back's assessment is that there is a tailwind in the market, driven by institutional investment and improved regulatory environments, which will ultimately support the growth of bitcoin.