Early Bitcoin architect Adam Back: BTC has never failed, and the pain is just the cost of growth

• Back believes that institutional participation in Bitcoin is still in its early stages. Over time, broader adoption will help smooth out sharp price fluctuations.

Author: Helene Braun

Translation: Deep潮 TechFlow

Deep潮 Guide: In light of recent sharp swings and corrections in Bitcoin, market sentiment is anxious. Early Bitcoin pioneer Adam Back pointed out at the Miami conference that this volatility aligns with the four-year cycle historically observed and does not indicate a breakdown of investment logic. He believes that institutional funding is still in its infancy, and as adoption expands, Bitcoin will experience “wild fluctuations” similar to early Amazon stocks before eventually maturing. This article offers insights from this crypto OG on the current market.

Key Highlights:

• Adam Back, an early figure cited in Bitcoin’s original white paper, states that the recent decline in cryptocurrency prices is consistent with past four-year cycles, reflecting inherent volatility rather than a collapse of investment logic.
• Despite a more friendly US policy environment and the launch of spot Bitcoin ETFs, Bitcoin has still fallen about 26% over the past year, while traditional safe-haven assets like gold and silver have surged.
• Back believes that institutional involvement in Bitcoin remains very early, and as time progresses, wider adoption will help stabilize extreme price swings.

After a series of milestone events involving institutional entry, investors initially hoped for a more stable trend. The recent decline has disappointed them; however, Adam Back, one of the early cypherpunks cited in Bitcoin’s 2008 white paper, notes that long-term observers should not be surprised by such volatility.

“Bitcoin is usually volatile,” Back said at the iConnections conference in Miami Beach on Tuesday. “Although there’s a lot of good news […] in the past four market cycles, we’re roughly at a low point in the price cycle.”

He pointed out that some market participants might be trading around this historical pattern rather than reacting to fundamentals. “There was a perception or possibility that, because now there are different types of investors, the market might behave differently. So I think some people expect the price to rebound later this year.”

Many anticipated that a more crypto-friendly policy from Washington and the long-awaited regulatory clarity for spot ETFs would unlock deeper institutional participation this year.

For many investors, this is also a litmus test. Bitcoin’s core selling points have long centered on scarcity, independence from government monetary policy, and as a digital store of value to hedge against currency devaluation.

Against the backdrop of high US deficits and ongoing doubts about the dollar’s long-term purchasing power, the macro environment seems highly aligned with this investment thesis.

However, the market has not followed the script. Despite a more supportive policy environment and improved channels for institutional entry over the past year, Bitcoin still declined about 26%. The asset has not decoupled from macro uncertainties and often moves in tandem with broader risk markets.

Meanwhile, traditional safe-haven assets have risen. Gold hit record highs, and silver reached multi-year peaks. Funds seeking to hedge inflation fears and geopolitical risks appear to have flowed at least partly into precious metals rather than digital assets.

Back, who is currently CEO of Blockstream and Bitcoin Standard Treasury Company (BSTR), also points out structural changes among Bitcoin holders.

“ETF holders […] are more sticky investors than retail traders,” he said. Retail investors tend to invest most during bull markets, leaving them with less “dry powder” during downturns. In contrast, institutions can rebalance across their portfolios.

Nevertheless, Back warns that institutional adoption is still in its early days. “I don’t think there’s that much institutional capital in the market yet.”

He believes that a large pool of capital has not fully entered the market, even though major regulatory hurdles have been cleared. Clearer rules are expected to pave the way for more institutional inflows.

He predicts that, over time, broader adoption will reduce volatility. He compares Bitcoin’s current stage to early high-growth stocks. “You can look at some analogies, like early Amazon (AMZN) stock, which experienced wild swings mainly due to market uncertainty.”

“This rapid adoption curve itself comes with volatility,” he said. Back expects that as adoption matures and more institutions, companies, and sovereign nations gain exposure, Bitcoin’s price fluctuations should moderate. He does not believe volatility will disappear entirely but expects Bitcoin to start resembling gold, with less extreme trading swings than younger assets.

Back also states that he measures Bitcoin’s long-term potential against gold’s total market value. He sees comparing the two as a rough benchmark for adoption. Currently, Bitcoin’s market cap is still about 10 to 15 times smaller than gold’s, implying significant room for growth if Bitcoin continues to serve as a store of value.

Despite short-term price swings, Back maintains that the long-term investment case for Bitcoin remains solid. “As an asset class, Bitcoin has stood out over the past decade, outperforming all other asset classes with the highest annualized returns,” he said.

For Back, volatility is not at odds with Bitcoin’s investment thesis but is a feature of its early adoption phase. “Volatility is part of the big picture,” he said.