The recent entry of Morgan Stanley into the US spot bitcoin ETF market has been seen by some as a catalyst for ending the current crypto bear market, given the vast distribution power of the company's $8 trillion wealth management network. However, according to Blockstream CEO Adam Back, this process will take longer than anticipated. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a positive market signal, 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." Back notes that investors do not invest overnight, and a build-up of investment could take up to a year or 18 months. He also points out that the regulatory environment, particularly in the US, has improved, with the current administration introducing a new legislative framework for crypto.
The establishment of bitcoin ETFs has the power to transcend administrations, with companies like BlackRock and Morgan Stanley likely to defend their business interests. Another factor to consider is bitcoin's cyclical nature, driven by the quadrennial halving event, which often leads to a bull run followed by a bear market. Back also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while it may be a factor, institutions are more systematic about risk and will consider even small tail risks. Overall, Back believes that the influx of institutional money, combined with the growing strength of the market, will eventually overwhelm sellers and drive up the price of bitcoin.