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 cautions that the process is slower than most people think. 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. "I think what people may have miscalculated is that institutional adoption is very slow," Back said in an interview.
He notes that even if large institutions like BlackRock recommend allocating 2% to 4% of their portfolio to bitcoin, the actual implementation by fund managers takes time, potentially up to a year or 18 months. Back emphasizes that investors do not rush into the market overnight, and the build-up of investments happens gradually. He also mentions that the regulatory environment, particularly in the US, has become more favorable for the crypto industry, with the current presidency introducing a new legislative framework and launching its own token shop.
This open-for-business approach has encouraged other jurisdictions to follow suit. Back points out that the established bitcoin ETFs have the power to transcend administrative changes, with major financial institutions now having a vested interest in defending their bitcoin-related businesses.
Another factor affecting bitcoin's price is its cyclical nature, driven by the quadrennial halving event. While some believe this cycle may be breaking, Back suggests that the possibility of a price slide remains due to market expectations. However, with institutional flows, such as ETFs and sovereign investments, and companies like MicroStrategy buying bitcoin directly or through shares in bitcoin treasury companies, the market is seeing strength. Back also addresses concerns about quantum computing's potential to break Bitcoin's cryptography, stating that while institutions may pay attention to such risks, they are more systematic about risk assessment and look for ways to mitigate them.