One of the newest buzz words in the blockchain industry is crypto asset management. The market capitalization of cryptocurrencies (nearly $300 bn) has been on a steady rise, and everyone is looking to key into the opportunities. Crypto asset managers take the hassles of navigating the industry away from naïve companies and individual investors. They receive funds from investors and promise an exact return on investment (ROI) over a specified period. Apart from established online wealth managers, such as Nutmeg in the UK, individual portfolio managers are now going into business in various nations. By the end of 2019, cryptocurrency hedge funds had over $2bn in AuM (assets under management), according to PwC.
Frankly speaking, there are many benefits to hiring a crypto asset manager:
Ø Many people are actively seeking to diversify their investment portfolio, but they do not have the extra-monetary resources (knowledge and time) to succeed with cryptocurrencies. The process of merely purchasing these coins remains a puzzle to some people, and this is a minute fraction of the technical know-how required as an investor. A trader/investor needs to find reputable exchanges that offer the cryptocurrencies they’re interested in.
Ø Usually, there is a need to spread out your investments across different exchanges and wallets. Doing all of this is so far from an easy task. Crypto portfolio managers and similar platforms use specialized tools and services to perform these numerous tasks and so much more. They simplify the entire process and are able to offer better services through effective and organized strategies.
Ø Another benefit of hiring a crypto asset manager is better planning of funds. Portfolio managers offer a fixed ROI, and many clients can work better with this. Clients are able to map out their investment figures and returns in exact terms. While this may mean financial limitations for some, this strategy actually relieves the anxiety and uncertainty associated with personal trading.
However, some of the risks of investing in cryptocurrencies remain valid. Hiring a crypto asset manager does not alleviate certain risks:
Ø Portfolio managers sometimes trade outside of bitcoin. Many altcoins are still very much experimental, and this poses a threat to the security of funds. Some asset managers even delve into forex (which is more volatile), while stating crypto alone in the paperwork. While bitcoin feels like the safe haven, each altcoin poses a risk of becoming a more technologically advanced cryptocurrency.
Ø Cybersecurity is a ravaging problem in the blockchain industry. There are many cases of loss due to hackers being reported in the media. The figures being reported are gross and scary. Individuals also lose their wallets due to negligence, such as the total loss of a secret key that grants access to a personal wallet. There is no intermediary guarantor. This makes consumer protection impossible. Any error in the transaction cannot be reversed or reported. A large number of coins can be permanently moved in a split second.
There’s some ray of hope, though. Some legislative initiatives are already curbing the various excesses of cryptocurrency trading. The governments of many nations are getting interested in the use of bitcoins and co for money laundering and illegal financial transactions. Blockchain developers are not relenting in their efforts. Crypto asset managers and platforms employ blockchain developers to ensure security and minimize risks. All of these are yielding excellent results, as crypto portfolio managers continue to make impressive records.
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