What is Crypto Asset Management?
Let's understand what is a crypto asset before we move on to managing them. This term means anything that has to do with cryptocurrency and in which you can invest your money. Bitcoin, altcoins, NFTs, tokens, and stablecoins are just the main ones.
Сrypto asset managers or DeFi asset management refers to the practice of managing cryptocurrency investments. This can include a range of activities, including:
- Investment diversification: This is diversifying a portfolio by investing in a number of different cryptocurrencies and blockchain projects, not just one coin.
- Crypto portfolio management: This is tracking investments and making informed buying and selling decisions based on market conditions and other factors.
- Risk Management: This is reducing the risks associated with investing in the volatile and often unpredictable cryptocurrency market. This may include implementing strategies such as stop-loss orders, futures and diversifying investments.
- Reporting: This includes providing regular reports on investments, like performance data and other key metrics.
In general, the goal of crypto-asset management is to maximize the potential return on their cryptocurrency investments while minimizing risk.
Let's look at each of these points in detail to emphasize their importance to every investor.
Investment diversification
Even profitable trading and investment strategies can lead to losses if basic fund management rules are ignored. When it comes to investments, there is always a risk. Any investment is associated with possible losses. Risks cannot be eliminated completely, but an investor should do everything possible to minimize them. Diversification and asset allocation are principles that are applied when determining risk parameters. These practices have been used for decades and continue to be the basis of investment management.
The main idea of diversification is to reduce risk by combining different investments. In other words, by creating a portfolio of assets that are independent of each other, the investor decreases the probability that he will incur financial losses due to a fall in the quotations of one or even several of them. He can partially or fully compensate for the loss due to growth in other assets. According to many financial analysts, the right diversification strategy can be more effective in the long run than individual investments.
Portfolio management
A balanced crypto portfolio is several dozen digital assets that are stored in different places. For this reason, keeping track of the current state of your investments can be quite difficult. It is important not only to see the percentage of growth or drawdown, but also the share of this or that cryptocurrency in the portfolio, the number of coins held, the history of transactions and the average purchase price of each cryptocurrency. That's why you need services that help portfolio management of crypto for you.
Most often, such services are websites or apps that allow an investor to track their crypto-assets and visually see how much each token is worth in real-time. The apps can track incoming and outgoing transactions themselves, making it easier for investors to manage their investment funds.
Risk Management
In any financial transaction, there are risks, of which there are many varieties. Risk management in cryptocurrency investments includes the implementation of strategies to minimize potential losses and protect against potential threats.
In addition to the investment diversification we are already familiar with, this includes:
- Using stop-loss orders: this is a type of order that automatically sells a stock when it reaches a certain price. A stop-loss order helps limit one's potential losses if the market moves against investors.
- Regularly review and rebalance your portfolio: You should always make sure that your investments are still in line with your risk tolerance and financial goals.
- Being informed about the market and individual investments: this helps you make more informed investment decisions and potentially reduce risk.
Risk management is an important aspect of cryptocurrency investing. With its help, you can maximize the potential profit from your investments while minimizing possible losses.
Reporting
Getting regular reports on the status of your investments allows you to assess their performance and also learn how the market is evolving. This allows you to make informed decisions about buying and selling digital assets.
In addition, reports allow you to track your financial goals and progress towards them. Also, cryptocurrency investment reports can be useful for those who monitor the overall situation in the cryptocurrency market and want to make more informed predictions about its development.
As you can see, crypto asset management services are an important factor for any investor who puts their funds into cryptocurrency or other types of digital assets.
What is the best way to manage crypto?
There are several ways to manage your investments. Each of them has its pros and cons. We will describe all of them in detail to make it easier for you to choose the option that is right for you.
Crypto asset management tools
You can track each asset in your portfolio individually, but managing crypto-assets can become quite complicated because information can come from different sources. It is best to use a crypto-asset management app that allows you to track your traditional investments at the same time. This will help you manage your investments efficiently, making it much easier to manage your finances.
Simply put, this is a crypto asset management platform that every investor can use to manage the digital assets they invest in.
These tools have many useful features:
First, you can easily connect multiple accounts from different exchanges and multiple wallets. This will help gather all of your assets in one place for more efficient management. Second, you can see your investments in reports and charts - this will give you a clearer picture of your crypto assets. Whether you are a beginner or an experienced user, this software will be invaluable in helping you manage your investments effectively.
Having a good crypto-asset management system is crucial for making informed investment decisions. However, trying all available apps and software to find the best fit is not a practical solution.
Let's take a look at popular cryptocurrency management tools that are available in today's market.
Gem
Gem stands out among investment trackers for its trade synchronization feature, which eliminates the need for manual entry of trade history. The tracker is completely free and has no hidden conditions or paid features.
Gem supports all major cryptocurrencies and fiat currencies, and syncs with 25 major crypto exchanges as well as other wallets through API keys. It shows all of your assets and provides real-time balance with historical portfolio performance. This removes the need for manual entry of trades.
Gem also has a Discovery section, which acts as a price tracker and personal research corner for crypto. You can mark favourites, read official documents, make short notes, and identify the most unprofitable and profitable assets.
Gem is also unique in its collaboration with ShapeShift, a popular instant cryptocurrency exchange platform, which allows you to easily exchange assets within the Gem app. It also has integrations with various third-party apps and services, such as Delta and Blockfolio, to provide a more comprehensive overview of your portfolio.
CoinTracking
CoinTracking is a portfolio-tracking application that offers many features. It is said to be aimed at more serious cryptocurrency investors and full-time traders who want something more than just a spreadsheet displaying their portfolio. However, CoinTracking will also provide serious investment management help for newcomers.
The app is available for both Android and iOS, but you must first register on the project website. What's more, all transactions must go through the company's website.
You can import all your transactions from major exchanges. CoinTracking also allows you to interact with major exchanges using API keys to import the latest portfolio and trade data. There is also the ability to import data from hardware wallets such as Trezor and software wallets such as Exodus or Blockchain.info.
However, the full suite of fancy features is only available to customers who are willing to pay for the service. The free account allows you to enter up to 100 transactions and does not allow you to import data from the wallet.
The app also allows you to check historical price data for all major coins and tokens of your choice. There is an experimental "Bitcoin Analysis" section, which predicts the behaviour of the BTC price based on past trends.
A feature of this app is the tax calculation tool, which is available for most countries on the help page. Here you can create tax reports, profit and loss statements and even find out which coins can be sold tax-free on a certain date.
CryptoCompare
CryptoCompare is a whole free ecosystem created for crypto. For example, there is a section that describes and compares different cryptocurrency wallets, and one that provides information about mining cryptocurrencies. There is also a news section that informs users about all the major events in the crypto world. The timeline feature shows key milestones of the coin development, and the "Influence" tab gives some insight into the sentiment on various social networks. The crypto wealth management tool is just one of many components of this ecosystem.
CryptoCompare's user interface is redundant and a bit old-fashioned. Users can create an account and add multiple portfolios to it. There is also an option to make your portfolio public so others can see it.
The Android and iOS apps are limited in options but are a handy complement to what you get on the website. Once you enter the coins and their purchase price, CryptoCompare calculates data such as realized profit or loss, total income.
There is also a risk analyzer that monitors the price behaviour of your assets and gives you an idea of how volatile your investment portfolio is or how easy it is to liquidate assets. Documentation is also provided explaining all the available features.
A small but handy feature of Cryptocompare is that it tells you how much of your crypto is stored on exchanges and how much is in wallets.
Crypto asset management companies
You can entrust your investment management to more than just software. There are many companies whose main goal is to take over the management of your investments.
The employees of such companies are highly skilled professionals in the world of cryptocurrency investing. Therefore, you can easily delegate them to manage your investments on your behalf, thereby increasing your profits and keeping you from losing money.
One important thing is worth mentioning. While some software you can get for free, investment management companies will always charge for their services. But when it comes to working with professionals, it's worth it.
As with software, there are many of such companies. We'll tell you about the most popular ones to make it easier for you to choose the one that's right for you.
Multicoin Capital
Multicoin Capital is a fairly young company - it was founded in 2017. However, in that time, it managed to grow into a major digital asset investment company. These include cryptocurrencies, tokens, DeFi, and everything that has been on the lips of users of the cryptocurrency world for the past few years.
"Multicoin Capital has been instrumental in some of the most significant cryptocurrency success stories. The company works hard to maximize the return on its investments, identify promising new projects and anticipate disruptive innovations impacting open markets," said Binance CEO Changpeng Zhao. The words of such a major figure in the cryptocurrency world speak volumes.
The company is easily trusted with its assets by large organizations and wealthy individuals alike. Its managed assets have reached more than $3 billion. Such impressive figures make it safe to say that Multicoin Capital is one of the leading crypto-asset management companies in the world.
Off The Chain
Off The Chain is an investment fund whose main purpose is to manage the digital investments of multiple clients. These include large companies, family offices and private clients. In other words, Off The Chain's clients are people who see the huge potential of cryptocurrencies and believe that they are the future.
In addition to investment portfolio management, the company offers advisory services that include private educational sessions, consulting, valuation modelling, due diligence analysis and custody support.
Eaglebrook Advisors
Eaglebrook Advisors is the youngest Investment Manager on our list. It was founded in 2019.
The company's specialization is Bitcoin. Therefore, Eaglebrook Advisors is primarily interested in those who invest in the world's most popular cryptocurrency. However, this does not mean that the company avoids all other altcoins. If you are interested in investing in other coins, you can become a client of Eaglebrook Advisors.
The company has over 400 employees, most of whom are financial advisors with extensive experience in cryptocurrencies and investing.
Eaglebrook makes asset management more accessible to both investors and their advisors by providing its clients with portfolio integration and customization services and advice on any investment matter.
Now you know what are crypto assets, and how you can effectively manage them. We looked at the most popular options for managing your cryptocurrency investments. When answering the question - which one is most convenient for you? - weigh the weaknesses and strengths of each.
If you choose crypto asset management software, keep in mind that each program operates within its own algorithm. In other words, you will sometimes have to take the time to manage your investment assets. Yes, your software will allow you to collect them in one place, which will give you a complete picture of your portfolio, but the decision to buy or sell coins will rest entirely on your shoulders.
Of the undeniable advantages of the software - in some cases, you can get it for free without any hidden fees or other commissions.
When we are talking about the crypto asset management company that is willing to take over the management of your investments, it is worth remembering that the cost of its services can often be high. However, if you choose these types of services, you can be sure that they will take care of your portfolio in a professional manner. In this case, you will not need to monitor the rate of coins you are investing in or urgently sell these or those assets, if the market situation suddenly changes.
There is another option for cryptocurrency asset management. If you are an experienced investor and investing is your main activity, you can monitor your portfolio yourself. However, once again, let us remind you that this requires free time and a lot of experience in cryptocurrencies and investing.
Whichever way you choose, remember that investing will not bring long-awaited profits if it is left to chance. In other words, don't leave your cryptocurrency portfolio unattended. This is probably the main rule of every investor.