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 capabilities of the company's $8 trillion wealth management network. However, Blockstream CEO Adam Back cautions that this process will take longer than expected.
Back, an early contributor to the Bitcoin community, notes that while bitcoin ETFs are a significant development, institutional adoption is a slow 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." Investors do not make overnight decisions, and a build-up of investment could take up to a year or 18 months, according to Back. "Some of that stuff is just starting to happen, and it will happen slowly.
So I think there's a tailwind." Back also discusses the impact of regulatory environments on the industry, citing the crypto-friendly stance of the current US presidency and the launch of its own token shop. The establishment of bitcoin ETFs, however, has the power to transcend administrations and will likely be defended by major financial institutions such as BlackRock and Morgan Stanley. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Even if this cycle is broken, a price slide could still occur due to market expectations. The influx of institutional investments, including those from sovereign wealth funds and companies like MicroStrategy, will eventually overwhelm sellers, according to Back. Additionally, Back addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while institutions may be paying attention to this risk, it is not a significant factor in the current market.