Bitwise CEO explains how bitcoin’s 'magical' volatility will woo Wall Street firms
June 16, 2021, 2:27PM EDT · 2 min read
Episode 32 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Bitwise’s Hunter Horsley.
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Bitwise, the $1 billion-plus crypto asset management firm, announced a Series B funding round to further advance its index and fund products on Wall Street.
With the raise, Bitwise became the latest startup in the digital asset industry to raise fresh capital amid a period of heightened interest from institutions and their clients.
In this episode of The Scoop, Bitwise co-founder and CEO Hunter Horsley explained how the industry is creating access for new classes of investors. In Horsley’s view, traditional portfolio managers and financial advisors remain an untapped market for the nascent crypto asset management industry.
“We think about serving the financial advisers, serving the long-term investor, a retirement account, and what are the solutions that will really work for them. That's why you've seen us focused on index products that rebalance themselves so that if the space changes, they don't need to be trading.”
In terms of the volatility, Hunter sees this as a positive. For Bitwise, volatility means the opportunity for financial advisors to enter the cryptocurrency market by adopting crypto as another asset class in a client or portfolio’s diversification strategy.
“The volatility of crypto is a magical gift for a financial advisor. What do I mean by that? If you're an individual who downloads one of the incredible apps that you have today, you see this jagged price chart, this twenty-four-hour price chart. Right. It's very scary, prone to emotional trading. And that's the scary version of volatility. If you're a financial advisor constructing a portfolio that you want to have certain low correlations, you want to have a certain Sharpe ratio, you want to balance across different asset classes. Well, in that case, crypto volatility is actually very useful.”
Looking back to Bitwise's latest round, the startup managed to attract notable backers. Indeed, some of the investors involved in raising the Series B round were industry heavy-hitters.
As Horsley put it:
“[The Series B Funding was] collected by Elad Gil, one of the most accomplished technology investors, Electric Capital, one of the leading crypto venture capital firms and some renowned Wall Street investors; Dan Loeb's Third Point, Daniel Ochs Willoughby, Louis Bacon’s Moore Strategic Ventures, Henry Kravis, Stanley Druckenmiller and [Bridgewater CEO] Dave McCormick.”
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