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, Blockstream CEO Adam Back cautions that the process is slower than many people think. Back, an early contributor to the Bitcoin community, believes that while bitcoin ETFs are a significant development, institutional adoption takes time.
"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 immediately invest, and a build-up could take a year or even 18 months.
He also mentions that the regulatory environment, particularly in the US, has improved, which indirectly encourages other countries to follow suit. The presence of bitcoin ETFs, now supported by major institutions like BlackRock and Morgan Stanley, is expected to have a lasting impact on the market, transcending changes in administration. Back also discusses the cyclical nature of bitcoin's price, driven by the quadrennial halving event, and the potential for a price slide due to market expectations. However, he believes that institutional flows, such as those from ETFs and sovereign wealth funds, will eventually overwhelm sellers.
Additionally, Back 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 plan for potential risks ahead of time.