Hunter Horsley On Boomers Buying Bitcoin

Hunter Horsley, CEO of Bitwise Investments (the institution behind the $BITB bitcoin spot ETF) is unusually active on Twitter for someone in his position, providing a high degree of transparency and insight to the Bitcoin community about the fund and the underlying market.

Horsley frequently comments on what goes on behind the scenes in his business, giving a welcome signal amid the day-to-day noise of the market's movements. Some of his recent tweets have been particularly interesting, since they show that interest in institutional bitcoin products has not decreased, even with the pullback.

Boomers Keep Showing Up

One of the most interesting conversations he has had is about the risk appetite of older investors: The wealthy and retired Boomers who are one of the major target markets for the ETFs.

It turns out that many of these older investors, who might be assumed to be somewhat conservative, are prepared to consider a significant allocation to bitcoin. There are a number of reasons for this, which Horsley discusses.

Diversification

Modern portfolio theory emphasizes owning a spread of assets with varying degrees of correlation, so that the overall portfolio is more stable. Bitcoin increases diversification. With limited exposure (1-5%) and rebalancing as the value changes, bitcoin actually improves the Sharpe Ratio and returns, without meaningfully impacting volatility.

What Is The Sharpe Ratio?

The Sharpe Ratio measures risk-adjusted return, allowing investors to increase returns while reducing potential downside.

REX WireBender Smort

Wealth Transfer

Some older investors may not be interested in bitcoin for themselves, but want to pass it on to their children and grandchildren. "While much of their portfolio may be focused on income now for retirement, including bitcoin can be a way to only deploy a small size but potentially get to pass along that asset, meaningfully appreciated, to their kids."

Asymmetric Risk/Reward

Finally, bitcoin's superpower is its potential to grow significantly in value, while there is also confidence that the network has matured and it's not going to disappear (as was more of a risk in the early days).

Consequently, a 1% allocation could easily lead to 10% portfolio growth, but the maximum possible downside is just 1%.

Of course, these reasons are all applicable to younger bitcoin investors, including those who hold their coins on-chain. However, it confirms the thesis that age alone does not prevent investors from buying BTC. In fact, they're often in an excellent position to do so.