The recent involvement of Morgan Stanley in the US spot bitcoin ETF 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 cautions that the process is slower than expected. The introduction of bitcoin ETFs is a significant development, but it will take time for institutional adoption to take hold, Back noted in an interview with Coindesk.
"I think what people may have miscalculated is that institutional adoption is very slow," he said. "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 investments could take up to a year or 18 months. "Some of that stuff is just starting to happen, and it will happen slowly.
So I think there's a tailwind," he added. Blockstream, founded by Back in 2014, offers self-custody wallets, layer-2 network settlement, and asset issuance to retail and institutional clients. Back is also the CEO and co-founder of BSTR, a bitcoin treasury company planning to go public via a SPAC merger.
The current US presidency has introduced a new legislative framework for crypto and launched its own token shop, indirectly encouraging other jurisdictions to follow suit. "They've definitely improved the open-for-business framework in the US, which has indirectly encouraged other jurisdictions to do likewise," Back said. The establishment of bitcoin ETFs has the power to transcend administrations, with companies like BlackRock and Morgan Stanley defending their business interests. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Even if this cycle is breaking, a price slide could still occur due to market expectations. However, institutional flows, such as ETFs and sovereign investments, are changing the market dynamics.
"They are growing their ability to buy bitcoin in different market conditions," Back said. "MicroStrategy, particularly, has been having an accelerated success with their Stretch kind of fixed-income product. So they've been able to use that to buy a lot of bitcoin, and it's escalated even in the last few weeks.
So those recurring buyers plus new institutional and wealth management buyers will eventually overwhelm the sellers." Back also addressed concerns about quantum-computing hardware progressing faster than expected and its potential impact on Bitcoin's cryptography. While institutions may be paying attention to this risk, it is unlikely to have a significant impact on the price of bitcoin in the near future.