The arrival of Morgan Stanley at the U.S. spot bitcoin BTC$66,924.57 ETF party earlier this month was characterized by some observers as the catalyst that will end the current crypto bear market thanks to the massive distribution power of the Wall Street wirehouse’s $8 trillion wealth management network.

Not so fast, said Blockstream CEO Adam Back, an early contributor to the Bitcoin community and recently tipped by the New York Times to be the cryptocurrency’s pseudonymous creator, Satoshi Nakamoto, an assertion he denies.

The bitcoin ETFs could be the single most important development of recent times when it comes to positive market signals, more so even than a pro-crypto U.S. administration, Back said, but it takes longer than most people realize. It won’t be immediate.

“I think what people may have miscalculated is that institutional adoption is very slow,” said Back in an interview with Coindesk. “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.”

Investors don’t just pile in overnight, he said. A build-up could take a year, even 18 months.

“Some of that stuff is just starting to happen, and it will happen slowly. So I think there’s a tailwind.”

Founded in 2014 by Back and other prominent Bitcoin developers, Blockstream offers retail and institutional clients self-custody wallets, layer-2 network settlement and asset issuance. Back is also the CEO and co-founder of BSTR, a bitcoin treasury company looking to go public via a SPAC merger with Cantor Equity Partners (CEPO).

The Trump effect

While ETFs may trump the government for boosting the industry, there’s still a regulatory influence. Consider President Donald Trump’s crypto-friendly term and compare it with the previous administration’s Security and Exchange Commission (SEC) and Chair Gary Gensler’s assault on the industry.

Instead, the U.S. now has a presidency that not only introduced a new legislative framework for crypto, but even launched its own token shop.

“They’ve definitely improved the open-for-business framework in the U.S., which has indirectly encouraged other jurisdictions to do likewise,” said Back, who lives in Malta. “So the U.K.’s FCA [Financial Conduct Authority] finally approved ETFs for retirement accounts and things. And I think maybe one or two other countries. They look at each other.”

While Donald Trump’s America may be open for crypto business, the now-established bitcoin ETFs have the power to transcend administrations, whether Republican or Democrat, Back pointed out.

“One of the reasons to suppose the ‘open for business’ is going to stay, even as you get new administrations, is that now Black Rock and the other ETF providers are going to defend their business,” he said.

“They’re going to apply a banking lobby to say they make a lot of money from the bitcoin ETF. We don’t want you to interfere with it. And so I think that now bitcoin has new allies in Black Rock, Morgan Stanley and Fidelity and all these guys.”

Four-year cycle

Another pricing factor to consider is bitcoin’s cyclical nature, a historical pattern driven by the quadrennial halving event, which cuts the supply of new tokens by 50%. The reduction often leads to a relatively consistent bull run followed by a bear market/recovery period.

Even if the four-year cycle is breaking, as some commentators believe, there’s still the reasonable possibility of a price slide happening simply because “people expected it to happen. So they sold and they made it happen,” Back said.

That logic is likely to change only when people see strength in the market, he said. That’s now coming in the form of institutional flows, such as the ETFs, sovereign and sovereign wealth fund investments, and investors buying bitcoin directly or shares in bitcoin treasury companies such as Strategy (MSTR), formerly called MicroStrategy.

“They are growing their ability to buy bitcoin in different market conditions,” Back said. “MicroStrategy, particularly, has been having an accelerated success with their Stretch kind of fixed-income product. So they’ve been able to use that to buy a lot of bitcoin, and it’s escalated even in the last few weeks. So those recurring buyers plus new institutional and wealth management buyers will eventually overwhelm the sellers.”

Strategy’s Stretch (STRC) is a perpetual preferred stock designed as a high-yield, bitcoin-backed income instrument.

Quantum-tative

As well as fielding inquiries about his identity, Back has also been answering a volley of claims about quantum-computing hardware progressing faster than expected and its power to break Bitcoin’s cryptography.

“People are trying to say it’s a factor,” Back said of quantum technology’s effect on the price of bitcoin. “But I think there’s a lot of information asymmetry in these markets, meaning that things which you think are perfectly clear are confusing to some other people, and their uncertainty impacts their decisions.”

That said, the recent round of quantum doomsaying may have institutions paying a bit of attention, Back conceded.

“Institutions are more systematic about risk,” he said. “So if there’s a tail risk, even a small one, they want to know that it’s covered. For retail investors, it sounds like something in the distant future that perhaps they’re not really worried about. But institutions will think a decade ahead and ask, ‘Is this 1% risk? Is there an answer to it?’ They’ll check stuff like that.”

UPDATE (April. 29, 13:10 UTC): Changes description of Morgan Stanley in the first paragraph from advisory network to wealth management network