The recent participation of Morgan Stanley in the US spot bitcoin ETF market has been seen by some as a catalyst to end the current bear market, thanks to the vast distribution network of the company's $8 trillion wealth management division. However, Adam Back, CEO of Blockstream, cautions that the process will take longer than expected. Back notes that while bitcoin ETFs are a significant development, institutional adoption is a slow process.
He mentions that even when major institutions like BlackRock recommend allocating 2% to 4% of their portfolio to bitcoin, the actual implementation takes time. According to Back, investors do not invest overnight, and the build-up of institutional investment can take up to a year or 18 months. He believes that the ETFs will have a positive impact on the market, but it will be a gradual process. Back also discusses the impact of regulatory environments on the industry, citing the crypto-friendly approach of the current US administration.
He notes that the introduction of a new legislative framework for crypto and the launch of a token shop have indirectly encouraged other countries to follow suit. The establishment of bitcoin ETFs, Back argues, has the power to transcend administrations and will be defended by major financial institutions like BlackRock and Morgan Stanley. Another factor influencing bitcoin's price is its cyclical nature, driven by the quadrennial halving event.
Back suggests that even if this cycle is broken, the expectation of a price slide can still occur, but this logic will change as people see strength in the market, driven by institutional flows and investments. He also addresses concerns about quantum computing's potential impact on Bitcoin's cryptography, stating that while it may be a factor, it is not an immediate concern. Institutions, however, are more systematic about risk and will consider even small tail risks, like the potential impact of quantum computing on bitcoin's security.