What is crypto asset management? The crypto asset management is a process that has several parts. First, it involves buying and selling of digital assets.
These assets are then used as investment assets. This is where the management aspect comes in.
At this point it is required to manage the crypto portfolio and allocate the assets in such a way that the overall value of the assets along with the portfolio grows.
Therefore, crypto asset management may seem very simple apparently but, on a second look, it may not seem so.
Therefore, it is important for you to know about it in detail.
The primary reason behind it is that different types of crypto assets and other digital assets based on blockchain have currently drawn the attention of the investors.
These crypto investors are now looking increasingly for different types of crypto assets to add in their portfolio over and above Bitcoin such as the Non-Fungible Tokens or NFTs and other digital offerings.
If you too want to invest in them you will need to know everything about them and also know the different apps and tools to use in order to make things easier for you as well as keep a proper track of all the crypto assets you have invested in.
This article deals with it all to make you more knowledgeable.
You will come to know about the need for crypto asset management, the different tools and software that will help you in the process, as well as a few tips from the advisors that will simplify the process and produce the best results.
What is Crypto Asset Management?
Typically, the crypto assets are gaining in popularity with each passing day and more and more people are showing interest in this growing investments asset class of late.
This does not only help them to diversify their crypto portfolio but also offers them a chance to make the most out of the additional potential upsides offered by these new digital asset classes.
Crypto asset management in particular is not at all a new concept or practice.
In fact, it is a necessity that has been in practice right from the very beginning.
Just like investing in any other type of asset needs managing the assets, crypto asset management is nothing different from that, at least in the basic sense.
Whether it is managing the entire crypto portfolio or a portion of it, crypto asset management is essential today.
Just as it is in any form, crypto asset management is also all about buying and selling and monitoring investments.
Typically, crypto asset management is a process that basically involves the digital assets that reside on the blockchain and are accessible for all to view the transaction details.
However, since crypto is a volatile asset class, it needs a little more effort in order to optimize your portfolio diversification efforts.
All you need to do is balance out the risks involved in it so that you increase the rate at which your portfolio is generating returns.
For a better management of your crypto assets, just like any other modern crypto investor, you will have to use different asset management tools.
Using these management tools has become a necessity now because these tools can handle a large number and variety of digital assets at a time.
The good thing about these crypto asset management tools and platforms is that these will allow you to make the most out of the crypto assets but for that you do not have to go very deep into the technical details involved in the process.
Primarily, it is the use of blockchain technology that secures the ownership of the digital assets which gives the value to these items.
Cryptocurrencies are one type of digital asset, with several others in the offing, and each of them having a number of use cases that is limited only by the imagination.
Today, almost every industry uses blockchain technology and creates their specific crypto assets.
A few others who do not have any right now, are researching ways to do so.
These crypto assets help the businesses in several ways which include and are not limited to:
- Raising funds as and when required
- Streamlining their working processes
- Reducing workload and expediting the working process and
- Curbing down on the expenses of operation to offer their service at a low cost and attract more customers towards their businesses.
Therefore, quite naturally, it is the utility of them that has encouraged the businesses to rapidly create tokenized tangible and intangible assets.
The intentions behind creating these crypto assets by the business entities seem to be pretty clear – where there is a chance to make profits, there will be a company trying to leverage to the maximum to make more money.
Typically, with the market cap of cryptocurrencies exceeding two trillion dollars at the beginning this year and that of the NFTs and other tokens more than twenty billion dollars, there cannot be a better reason for the businesses to try and get into the action.
Now, in order to have a better understanding about crypto asset management, you will first need to have a clear understanding about crypto assets.
As said earlier, a crypto asset is a cryptocurrency or any other asset that is tokenized.
This actually represents the transfer of the value of the object to the blockchain.
You can fractionalize these tokens if you want a wider distribution of its ownership.
It is pretty much the same as dividing the ownership of a company in parts, called shares, which you trade over a stock exchange.
The only difference in the case of a crypto asset is that all these shares are digital in nature.
Like all other innovations, historically, crypto assets too had its share of reputational and branding issues initially.
However, irrespective of the volatility and unpredictability, crypto assets generated temporary bubbles over the past few years, especially the quintessential crypto coin, Bitcoin.
Therefore, crypto assets are not going to leave the stage anytime soon.
It will grow notably over the years, and there are different ways and possibilities for it such as:
- Through the development of these assets at the institutional level
- Through the duplication of investment structures or
- Through infrastructures based on blockchain technology.
Therefore, crypto asset management is also likely to grow significantly over time, which is not far from now.
As a result, new and better investment vehicles for these crypto assets are coming up.
Over the past couple of years the market has experienced the surfacing of several different investment vehicles for the particular kind of non-retail investors.
These investment vehicles have made it easier to access the crypto assets by simply removing the multiple burdens or barriers of investing in them directly.
And, this trend seems to be gathering speed and their demand seems to be skyrocketing.
Now, in order to manage your crypto assets you will need to use different tools and software.
Therefore, it is good to explore these tools that will help a great deal in cryptocurrency asset management.
These management tools are actually a software platform that helps the crypto investors, the financial professionals, and the everyday investors with a handful of crypto assets alike in managing their different crypto assets.
These tools or software offer myriad benefits such as, connecting several crypto accounts and wallets in order to monitor all of their crypto holdings through a single dashboard.
Apart from that, the other reasons to use these tools are:
- To maximize the value of the crypto investments – If you are one of those ‘out of sight, out of mind’ persons, these tools will help you to have a clear view of all your crypto assets in front of you. This will help you to easily understand exactly where your investments stand and what are the necessary changes you need to make in order to ensure that the investments move towards your goals and maximize profits. You will know which assets to hold and which to sell off to achieve your financial objectives.
- Make proper diversification – If you want to diversify your crypto portfolio, which is always recommended especially when you are dealing with extremely volatile assets like crypto, these tools will be of great help. These tools will play a pivotal role in providing you with the necessary insights and a comprehensible overview of the various types of crypto coins you have in your portfolio. You will be able to make valuable and more informed investment decisions that will protect and balance your assets in a more meaningful manner.
- Health of your wealth – These tools will also help you to comprehend the health of your wealth by following the net worth. This will let you know the value of everything that you own against the value of the things that you owe. This may become very difficult as and when your crypto portfolio grows and becomes more diverse. The asset management tool will help in tracking the value of the assets so that you can add more, if you want, to your asset pool in order to increase its net worth.
- Protection of assets – These tools will help you to protect your crypto assets in a much better way. This is very important because crypto, as you may know, is decentralized and mostly unregulated. When you use these tools and software your assets will be well protected from any external threats.
Most importantly, the traditional portfolio manager software will not be able to protect your crypto assets because, for the most part, these are too slow and underpowered.
The modern crypto asset management platforms, on the other hand, will be much more efficient in handling various types of crypto assets just as it is required and that too at quite a fast speed.
However, in order to ensure a much better protection of your crypto assets, make sure that in addition to these management tools you also take additional safety precautions such as a strong and secure internet connection, use multi-factor authentication wherever applicable, a firewall, and take help from a professional in cyber security.
Objectives of Crypto Asset Management
The objectives or goals that you can achieve by using crypto asset management are varied and many but the most significant one is that crypto is going mainstream.
It will need a lot of time and effort from your side, especially if you are a new investor, to learn the intricacies of crypto and figure out the best way to invest. It can be really overwhelming at times.
Apart from that, you will also need to check several crypto exchange accounts and wallets you own every day.
You will not only struggle to do so but there is a high chance that you will be stalled out on your investment goals.
That is why both the importance and popularity of crypto asset management is growing among the investors who can make the best use of its true potential to achieve their investment goals.
The crypto asset management apps and services will simplify the process when you need to juggle with different types of crypto assets, accounts and wallets.
You will have everything consolidated and streamlined making it easy for you to manage your crypto portfolio.
You will be much better off if you use one of those robo-advisors.
These are actually AI/ML or Artificial Intelligence and Machine Learning-enabled tools. These programs will help you in a lot of ways such as:
- Creating your investment portfolios according to your objectives
- Tracking and managing a large number of crypto assets
- Viewing and analyzing the performance of your crypto holdings with the help of different metrics and charts
- Identifying opportunities to trade underperforming assets with those that are performing better.
Whether you use a robo-advisor or do it all by yourself, crypto asset management will ensure that you get an easy passageway to entry and ensure success for everyday trades without needing a thorough understanding of this specific crypto sector.
The demand for crypto asset management is growing over the years because crypto assets are now no longer considered to be a dream of the eccentrics or even a ponzi scheme.
It is now considered to be a full-grown asset class that offers high returns and therefore needs proper management.
The opportunities offered by the crypto assets today can be further increased by utilizing the DeFi or Decentralized Finance ecosystem that usually uses smart contracts based on blockchain via eligible assets.
The combination of their intrinsic volatility and a comparatively low correlation with the other asset classes rationalizes the use of crypto portfolio management services.
Also, a few specific types of crypto assets act as a hedge against inflation.
It is required to make sure that it acts likewise because it is very important in today’s perspective when losing money due to faulty monetary policies is a commonplace all across the globe.
A proper crypto asset management service or tool is therefore indispensable today.
There is no reason not to use the crypto asset management products given the fact that these are quite easily accessible and are pretty efficient in doing their jobs.
Moreover, the blockchain technology that underpins crypto is pretty difficult to understand for any average crypto investor.
It is still in its nascent stage and the world has yet to understand it and its nature fully.
This technology has a steep learning curve. Add to that, you will also need to get familiar with a lot of other things such as:
- The trading places
- The process to get onboard
- The wallets
- The private key management
- The irreversible transactions and more.
All these do not make management of crypto assets very intuitive and naturally creates a lot of entry barriers.
The crypto asset management products will simplify things and make them much more accessible by removing the complexities that are inherent.
Also, the sophistication of the crypto assets calls for professional advice while investing in or trading with them.
It is required whether you have a small number of these assets or a lot of them in your portfolio.
These professionals will be able to help you in a lot of different ways such as:
- Identifying the active and passive investment vehicles and choose one according to your investment objectives
- Gaining access to a bunch of crypto assets so that you satisfy the portfolio diversification criteria
- Looking for useful crypto asset derivatives to ensure better risk management and its distribution and more.
With so many different types of crypto assets, in fact numbering to multiples of thousands in total, and every one of them coming with different investment rationale and specific features, this will be quite difficult without professional help.
Crypto asset management can do it all for you with the tools offered which will be better for your investment policy.
How is Crypto Asset Management Different?
Though it may seem similar phonetically, crypto asset management is quite different from any regular asset management practices.
As said earlier, crypto asset management deals with only digitally tokenized assets.
However, in addition to that, when you use these specific apps and platforms, you will also have more diverse investing options offered.
You will typically get an exposure to both emerging as well as traditional investment opportunities.
Moreover, you will get real time information and insights that will help you to make more informed and educated trading and investment decisions based on your entire investment portfolio when you use the crypto asset management apps.
Contender for Correction
Crypto, as such is a strong contender for correction in 2022, the money managers opine.
This is mainly because most of the investors and institutions still believe that this is not the right type of asset for most of the retail investors.
Still, a lot of people and institutions invest in crypto and also have plans to increase their investment allocations in 2022.
It is expected that in this year there will be quite a few large fund managers and pensions that will begin investing in crypto alongside the big-time investors having a lot of financial markets acumen who have already gotten involved.
Most people think that the global economy of today is a stimulus-centric environment and therefore, crypto coins such as Bitcoin will serve as a good hedge against inflation.
This is because the original crypto Bitcoin and others have broken into the mainstream awareness over the past couple of years.
Since crypto can offer huge gains, most of the investors recognize this asset class as a legit investment option in spite of the fact that several economists, financial market analysts, crypto critics, central banks, governments and regulators expected its early demise.
Tips of Advisors
So, after knowing all these things about crypto assets, quite naturally you may be quite curious about it and want to try your luck by investing in it.
However, before you jump into it, here are a few tips from the experts that you should be aware of and follow during your crypto journey.
This will protect you from giving into the emotional euphoria among the general public regarding crypto and ensure that your crypto portfolio is in good health as is your financial stability.
Since this is a budding field with only a few sets of norms and rules surrounding it, you should start with a healthy measure of skepticism.
Typically, you should never invest in crypto if that will take you away from your other financial goals and fundamentals such as creating an emergency fund, paying off your debts and bills, or optimizing your retirement account.
The next important thing to make sure is that you do not invest in crypto by getting seduced by the statements and opinions of the social community or by the allure and intrigue that this new technology is known to create.
Instead, you should have and follow a specific mindset when you invest in crypto.
The excitement around the crypto space and the hype surrounding it should never be a reason to invest in crypto assets, no matter how compelling these may seem to you.
You must know that there are multiple cryptocurrencies out there and all of them are not created equal.
Therefore, it is naturally not possible by one person to know about them all.
While one person may like one specific type of crypto asset, another may opt for a completely different one.
Therefore, it will be unwise for you to believe that what others think about a crypto should work in your case as well.
You should be prepared and be courageous enough to take losses. As it is in any form of investment, gains are not guaranteed in crypto investment as well.
Instead, few crypto advisors say that this should be considered as a lottery ticket which may offer you a lot of money if you win or lose the value of the ticket you purchased if you do not hit the jackpot.
Therefore, you should put in only that much money in crypto which you are comfortable to lose.
Do not invest any amount that, if you lose, will become a financial burden for you and your family and you cannot come out of it.
This is certainly not the right way to achieve your investment goals.
Crypto investment is certainly not the cup of tea for those who are risk-averse. Crypto is very volatile and therefore its value may rise or fall significantly in no time.
If that is stressful to you so much that you may lose your sleep over it, do not go for crypto investment.
Try some other safe-haven investment options instead.
Moreover, there is no magic formula to success in crypto investment.
There is no standard technique for investment in crypto because it does not have much historical data being still in its stage of infancy.
Therefore, there is a significant level of uncertainty in crypto investment.
Go ahead with it if you have the stomach for it but rest assured that there is no specific amount of data that will help you to make an informed and educated investment decision.
Add to that, there is also no specifically designed or tested way in which you can value the crypto assets.
The evaluation of crypto assets largely depends on the sentiments of the market.
This means that when you invest in crypto you are actually going in blind – but that is the case with any new business or investment, isn’t it?
Also, you should know why exactly you want to invest in crypto.
Do you consider it to be an emerging investment class or is it that you think that it will become mainstream one day and you can use it in place of the traditional US dollars?
Well, in that case you should be informed that crypto does not have a very strong proof that it has all the power and attributes to be able to stay in the long-term, retaining its high value as it has today. Are you okay with that?
Typically, most people invest in crypto assets for all the wrong reasons they could possibly have.
It is largely because they do not have a proper understanding of the technology, the trading and investing process, the intricacies and complexities in it, and , most importantly, due to the failure in proper crypto asset management.
You should do your own research and also make sure that you think, manage, and proceed in the right way to achieve your crypto investment goals. Due diligence is extremely important in this case just as it is during investing in stocks.
Crypto experts also warn the investors who consider Bitcoin as a currency and invest in it.
Ideally, they say that no one should have a currency hedge as a part of their investment strategy.
This is because it is unwise to trade dollars for Euros as an investment strategy.
Crypto or Bitcoin is still not a legit currency because the governments of the world have not yet considered crypto as a global currency.
And, this is an event that has a very remote likelihood anytime soon.
Therefore, you should invest in crypto if you can keep it in its place and not rely on it as your overall financial investment strategy or retirement.
Ideally, the major part of your investment portfolio should comprise stable assets that are projected for a significant growth in the long term such as gold, stocks and bonds.
This means that crypto should only be a small portion of your entire investment portfolio.
Even better, crypto should only be an additional option, provided you have the extra money that you can gamble with and afford to lose.
And, when you really do consider investing in crypto, make sure that you stick to the major ones only, especially those assets that have a huge growth potential and a larger market cap.
And, of course, do forget to employ proper crypto asset management techniques for better results, proper protection of your assets, and higher returns.
Given the fact that crypto assets are extremely volatile in spite of having the potential to offer high returns, it is essential to use effective crypto asset management tools and techniques, as mentioned in this article, for your own benefit.