Inside the Bitwise Bitcoin ETF: Hunter Horsley on Building BITB
- Apr 10, 2024
- 5 min read
Updated: a few seconds ago
Investing in Innovation: Building a Bitcoin ETF
In January 2024, the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs after years of industry pressure. Among the launches, the Bitwise Bitcoin ETF (BITB) became one of the top 25 fastest ETFs in history to reach $1 billion in assets under management.
In this episode of The Artisan Podcast, Arthur Salzer, CFA, Founder and CEO of Northland Wealth Management, speaks with Hunter Horsley, CEO and co-founder of Bitwise Asset Management, about the six-year journey to build a Bitcoin ETF, what his experience at Facebook taught him about the scale of the internet, and why Bitcoin’s low correlation to traditional assets makes it a portfolio construction tool, not just a speculative trade.
From Facebook to Bitcoin: Why a Former Tech Insider Built a Crypto Asset Manager
Before founding Bitwise in 2017, Horsley was a product manager at Facebook and Instagram, where he worked on monetization during Instagram’s growth from roughly $70 million to over $1 billion in annual revenue. He later worked on video monetization for Facebook’s core platform under Fidji Simo, now CEO of Instacart.
That experience gave him three observations that shaped his thinking about Bitcoin. First, the sheer scale of the internet: Facebook reaches over 3 billion users, including people in rural communities with limited infrastructure. Second, the fragmentation underneath that scale: 170 different currencies, legal systems, and financial infrastructures, all nominally connected by the internet but operationally siloed. Third, a global erosion of trust in centralized institutions, accelerated by platforms that gave everyone a voice.
“You see Bitcoin and what is it? Something born out of the great financial crisis that leverages the scale of the internet, puts one unified global standard into place, and addresses the eroding trust of leaders by getting rid of the leader. There is no leader.”
— Hunter Horsley, CEO and Co-Founder, Bitwise Asset Management
The Access Problem: Why Most Investors Needed an ETF
Horsley and his co-founder Hong Kim recognized early that most of the crypto infrastructure being built in 2016-2017 served day traders and enthusiasts. Nobody was building for the way most people actually access asset classes: through a financial advisor, using a managed product like an ETF, mutual fund, or separately managed account.
“The way people access municipal bonds or emerging markets, they work with a financial advisor, they use an asset management product like an ETF or mutual fund. Nobody was focused on building that building block for crypto.”
— Hunter Horsley
Bitwise’s annual survey of financial advisors confirmed the gap: 88% of advisors interested in crypto said they were waiting for a Bitcoin ETF before they could participate. With U.S. advisors managing north of $20 trillion, the market was enormous but inaccessible without a regulated product structure.
Six Years of SEC Filings: The Road to Approval
Bitwise filed for a Bitcoin ETF multiple times over six years, submitting hundreds of pages of analysis to the SEC. The delay was not unique to Bitwise; the SEC rejected every spot Bitcoin ETF application until a court ruling in 2023 (Grayscale v. SEC) effectively forced the agency to reconsider. The approvals came in January 2024.
Canada, notably, was three years ahead. The first Bitcoin ETF in the world launched on the Toronto Stock Exchange in February 2021. As Salzer notes in the conversation, Canada also launched the world’s first ETF of any kind in 1990, three years before the SPDR S&P 500 ETF (SPY) launched in the U.S. in 1993. The pattern of Canadian regulatory openness followed by U.S. scale is relevant for Canadian investors: having early access doesn’t always translate into sustained flows without the depth of the U.S. capital markets behind it.
BITB Launch: One of the Fastest-Growing ETFs in History
The Bitwise Bitcoin ETF launched on January 11, 2024. Within four days, it had gathered $370 million in assets. It crossed $1 billion in AUM within weeks, making it one of the top 25 fastest ETFs to reach that milestone in the 30-year history of the ETF industry. Collectively, the new U.S. spot Bitcoin ETFs gathered nearly $10 billion in their first month.
BITB differentiates itself from competitors on several dimensions: it is among the lowest-cost spot Bitcoin ETFs, it was the first and only U.S. Bitcoin ETF to publish the public Bitcoin addresses of its holdings (providing blockchain-level transparency), and Bitwise donates 10% of BITB’s profits to organizations funding Bitcoin open-source development.
Bitcoin in a Portfolio: The Correlation Argument
The most counterintuitive insight from the conversation is Horsley’s explanation of how Bitcoin’s volatility can actually reduce overall portfolio risk. The key is correlation.
Bitcoin’s correlation to the S&P 500 is approximately 0.10. Its correlation to the Nasdaq is roughly 0.15. Its correlation to the Bloomberg Aggregate Bond Index is near zero, and it has low correlation to gold. In practical terms, this means that when stocks are down and bonds are flat, Bitcoin is likely doing something different. That independent movement, when sized appropriately within a portfolio, can lower the overall volatility of the combined holdings even though Bitcoin itself is volatile in isolation.
“When you’re constructing a portfolio, if the correlation is low to other things, then the volatility can be extremely helpful. When you view Bitcoin in isolation, day to day, you say it’s volatile. But when you view the overall portfolio, it actually reduces the overall volatility.”
— Hunter Horsley
Bitwise has published research, including a CFA Institute guide to Bitcoin, blockchain, and cryptocurrencies, and white papers on Bitcoin’s role in traditional portfolios. For UHNW families working with a multi-family office, the sizing question matters: too large an allocation amplifies volatility; too small an allocation has negligible impact. The right sizing depends on the family’s risk tolerance, time horizon, and liquidity needs.
Northland Wealth’s Early Bitcoin Adoption
Northland Wealth was one of the first Canadian wealth management firms to allocate client capital to Bitcoin, beginning in the spring of 2019. Arthur Salzer has described Bitcoin as the most interesting asset he has researched in his 30-year career, citing its asymmetric return profile and the difficulty of comparing it to traditional alternatives like private equity, real estate, and hedge funds once Bitcoin became the benchmark.
The firm’s approach to Bitcoin reflects its broader investment philosophy: institutional-quality due diligence applied to every asset class, including digital assets. Northland’s reporting infrastructure through Addepar allows Bitcoin holdings to be consolidated alongside traditional and alternative investments in a single portfolio view, rather than existing in a separate, unmonitored account.
About the Guest
Hunter Horsley is CEO and co-founder of Bitwise Asset Management, which manages the Bitwise Bitcoin ETF (BITB) and is one of the largest crypto asset managers in the United States. Before founding Bitwise in 2017, Horsley was a product manager at Facebook and Instagram, where he worked on monetization and video. He holds a BS in Economics from the Wharton School of the University of Pennsylvania and was named to the Forbes 30 Under 30 list. Over 3,000 wealth teams, RIAs, family offices, and institutional clients work with Bitwise.
Make sure to check Northland Wealth’s YouTube Channel for more episodes.
