Some observers have hailed Morgan Stanley’s entrance into the U.S. spot bitcoin market as a turning point poised to end the crypto bear market, citing its $8 trillion advisory network. However, Blockstream CEO Adam Back, an early Bitcoin contributor and rumored pseudonymous creator Satoshi Nakamoto (which he denies), suggests the impact may not be immediate.
Back acknowledges that bitcoin ETFs could signal significant positive change, even surpassing a pro-crypto U.S. administration’s influence. Yet, he emphasizes that institutional adoption is slower than many anticipate. Despite BlackRock recommending 2% to 4% of general stock portfolios in bitcoin, fund managers have yet to fully integrate this advice, and it might take up to 18 months for such changes to manifest.
“The assumption was that institutions would quickly jump on board, but adoption is actually quite gradual,” Back told Coindesk. “While ETFs are a promising development, the full impact will unfold over time as more investors gradually increase their allocations.”
Blockstream, founded in 2014 by Back and other Bitcoin pioneers, offers services including self-custody wallets and asset issuance to both retail and institutional clients. Back also leads BSTR, a bitcoin treasury firm planning a public listing through a SPAC merger with Cantor Equity Partners (CEPO).
Despite the positive regulatory climate under former President Donald Trump’s crypto-friendly administration, ETFs could have an enduring influence across political changes due to their economic significance. BlackRock and other major providers are likely to advocate for bitcoin ETFs regardless of administrative shifts, ensuring a stable ‘open-for-business’ environment.
“ETFs provide the industry with powerful allies such as Black Rock, Morgan Stanley, and Fidelity, who will defend their interests,” Back noted.
Bitcoin’s price cycles, influenced by events like halving, which halves token supply every four years, are also crucial. Even if these cycles alter, market expectations can still drive price fluctuations. However, the increasing institutional interest through ETFs and sovereign investments could counteract such trends over time.
Additionally, concerns about quantum computing’s potential to undermine Bitcoin’s cryptography have surfaced. While some speculate it might influence bitcoin prices due to perceived risks, Back argues that these concerns are often exaggerated by information asymmetries in the market. Institutions, however, remain vigilant about even minor long-term risks, ensuring they account for such possibilities in their strategies.
“Institutions take a systematic approach to risk assessment,” explained Back. “They consider potential future threats and evaluate them thoroughly to safeguard against any significant impact.”