The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been viewed 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, an early contributor to the Bitcoin community, cautions that the process will be slower than expected. The introduction of bitcoin ETFs is a significant development for positive market signals, but institutional adoption is typically a slow process. Back notes that even when major institutions like BlackRock recommend allocating 2-4% of their portfolio to bitcoin, fund managers have not yet implemented this, and it will take time.
The build-up of investment could take up to a year or 18 months, he says. While the Trump administration's crypto-friendly stance has improved the regulatory environment, the established bitcoin ETFs have the power to transcend administrations. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Back believes that even if this cycle is broken, the market's expectations can still lead to price fluctuations. The influx of institutional flows, such as ETFs and sovereign wealth fund investments, will eventually overwhelm sellers, he says.
Additionally, the progress of quantum computing hardware and its potential impact on Bitcoin's cryptography is a concern for institutions, which are more systematic about risk assessment.