Investors are increasingly looking for a bit of cryptocurrency, such as Bitcoin, to diversify their portfolios and reap some of the potential benefits of this new asset class.
However, cryptocurrencies can be esoteric and difficult for new users and many ordinary investors – including how to set up a wallet and securely transfer tokens.
As a result, crypto-asset management solutions are created to help both individuals and businesses benefit from crypto without having to worry about the ins and outs of technical procedures.
The next evolutionary phase has already reached significant milestones after the UK Robo advisor and online asset manager Nutmeg exceeded GBP 1 billion in assets under management last year. However, this degree of centralized implementation and advice is less so for crypto trading, which faces multiple challenges that make it unattractive for less knowledgeable investors.
With a clear need, crypto-assets for asset management are rapidly emerging to assist private investors in their exploration of the market. For the companies behind these platforms, the incentive is clear: the market capitalization of cryptocurrencies is nearly $ 400 billion, and it is beginning to show signs of stabilization.
A more mature market also means that less well-informed investors are likely to immerse their toes, requiring a platform that provides easier access compared to the fragmentation that currently defines the trading eco-system.
Buying cryptocurrencies is still more difficult than buying common stock. As cryptocurrencies attract new users, more market players are becoming aware of the need for simple tools designed to manage crypto portfolios for traders of all levels.
At present, new traders must first find a wallet that accepts the cryptocurrencies they want to trade, and then find an exchange that lists their favourite currency before completing a multi-faceted and lengthy verification process. Once they are on the market, they need to spread across portfolios and stock exchanges if they want to diversify their assets. Although feasible, the complexity of the process remains a major barrier to entry for many potential traders. Many in the industry acknowledge the problem. Alon Murdoch, CEO of Blox, notes that “keeping track and managing your crypto assets is not a walk in the park, not even, or especially for the more experienced traders. Know where your coins are kept, how they performed and what their real-time status can be challenging. “
As a result, some companies are introducing a tool that is now commonplace in more traditional financial markets: asset management. Rather than having to manage multiple accounts and portfolios, crypto asset management platforms simplify the process by helping users to consolidate their various holdings while providing improved portfolio management tools.
There are already various funds that offer crypto-asset management and invest on behalf of clients. So far, this model has shown strong results, with one company – Bitwise Asset Management – reporting a return of 51% in less than 4 months after coming up with a crypto-specific fund. Institutional investors have taken note of the increasing popularity of the investment category, with research suggesting that the number of crypto investment funds could double in 2018.
Nevertheless, most traders in the ecosystem still manage their own investments, and there are several platforms that have developed themselves as go-to-tools, with new ones every day.
So far, the crypto sector has seen countless exchanges, all of which offer a combination of cryptocurrencies, but not an extensive list. This is a challenge for investors, as many stock exchanges are not compatible with all portfolios, which leads to complications in managing a diverse range of assets.
To resolve the issue, crypto asset management platforms attempt to simplify the process without resorting to a third party or manager to handle user investments. For daily traders who lack an in-depth and thorough understanding of the field, these tools offer an easier path to entry and success.
There are several platforms that promise to streamline asset management for crypto traders, and many have already demonstrated their effectiveness. For example, Murx’s Blox offers users a simple way to centralize their multiple wallets and exchange accounts in one location.
The company’s tools help users manage multiple portfolios at the same time and support automatic synchronization so that user transactions and purchases are always centrally updated. Moreover, the platform encourages more use with tokenization. Traders can use CDT tokens to unlock premium features and can earn coins by using the company’s portfolio tracking tools.
Others offer more traditional asset management tools, such as Iconomi, which allow traders to create their own asset groups and combinations to meet their risk appetite. Blackmoon, another blockchain-based platform, houses a blockchain-based service that manages tools for asset managers to manage client investments, as well as retailers to monitor their own resources. Some companies have even developed a more democratic approach, allowing traders to invest in the portfolios and strategies of other participants, such as Melonport.
Ultimately, cryptocurrency optimism and embrace will only be sustained if new entrants in the market are able to easily participate. Crypto asset management tools offer traders of all skill levels a simple and more centralized location to manage their investments, and thus a clearer pathway to entering the ecosystem.
As these platforms become more mainstream and continue to defragment the increasingly segmented crypto exchange environment, the burgeoning asset class will continue to experience improved growth. Even so, their success depends not only on delivering a single location to track investments but as a hub to understand the entire market better.
The next frontier for asset management tools may be consolidation as platforms discover their limitations and locate partners that can enhance their value proposition. By building and promoting these highly synergistic platforms, the cryptocurrency market will finally open itself to much broader participation from the entire online investing community.