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Why is Crypto Asset Management the Next Big Thing in Asset Management?

Apart from transforming communication, the internet was instrumental in bringing investing online, removing informational and execution obstacles for a wide group of retail traders. Following the spread of trading applications, a broader variety of investors had access to incredible features, including the ability to trade in financial markets with faster execution and lower fees.

Trading has become much more popular since then, thanks to platforms like eTrade and Interactive Brokers, which have made a wide range of asset classes, tools, and education available to a large number of retail traders. Even better, these systems centralize many activities and provide liquidity from a variety of exchanges and ECNs, thereby enhancing the benefits of online investing.

TAKEAWAYS IMPORTANT

Investors are increasingly attempting to diversify their portfolios by adding a little cryptocurrency, such as Bitcoin, to catch some of the potential upside of this new asset class.
Cryptocurrencies, on the other hand, can be esoteric and difficult to grasp for new users and many ordinary investors, especially when it comes to setting up a wallet and safely transferring tokens.

As a result, crypto asset management solutions are being developed to assist consumers and businesses in taking benefit of cryptocurrency without having to worry about the ins and outs of the technology.

Asset Management for Cryptocurrencies

After Nutmeg, a UK-based robo-advisor and online wealth manager, achieved GBP 1 billion in funds under management last year, the next phase of growth is already reaching significant milestones. However, crypto trading, which confronts several problems that make it unsuitable to less-experienced investors, lacks this level of centralized execution and advice.

With a clear demand, crypto asset management solutions are swiftly gaining traction to aid retail investors in their market research. The motivation for the entrepreneurs behind these platforms is clear: the market valuation of cryptocurrencies is approaching $400 billion, and it is beginning to stabilize.

A more mature market also means that less experienced investors are more likely to dip their toes in, necessitating a platform that provides easier access in comparison to the current trading ecosystem’s fragmentation.

Simplified Crypto Management’s Allure
Buying bitcoins is still more difficult than buying traditional stocks. More market participants are becoming aware of the need for simple tools designed to manage crypto portfolios for traders of all skill levels as cryptocurrencies draw more consumers.

At the moment, prospective traders must first discover a wallet that accepts the cryptocurrencies they want to trade, then find an exchange that lists their favorite coin, before going through a complex and time-consuming verification process. If they want to diversify their assets after entering the market, they must spread out between wallets and exchanges. While it is possible, the complexity of the process remains a significant barrier to entry for many would-be traders. Many people in the sector are aware of the issue. “Keeping track and managing your crypto assets is no walk in the park, even for the more experienced traders,” says Alon Muroch, CEO of Blox. It can be difficult to know where your coins are kept, how they performed, and what their current condition is.”

As a result, some businesses are implementing asset management, a tool that is now ubiquitous in more traditional financial markets. Rather than needing to handle several accounts and wallets, crypto asset management solutions make the process easier by assisting users in consolidating their various holdings while also giving superior portfolio management capabilities.

There are currently a number of funds that handle crypto assets and invest on behalf of their clients. So far, this methodology has yielded positive results, with one firm, Bitwise Asset Management, posting a 51 percent return in less than four months after launching a crypto-focused fund. Institutional investors have taken notice of the asset class’s growing popularity, with studies showing that the number of crypto investment funds might double in 2018.

Despite this, the majority of traders in the ecosystem still manage their own investments, and multiple platforms have established themselves as go-to tools, with new ones appearing daily.

Organizing an Emerging Market
So far, the crypto sector has seen a slew of new exchanges pop up, all of which provide a mix of cryptocurrencies, though not an exhaustive list. This is a problem for investors, as many exchanges aren’t compatible with all wallets, causing problems when managing a broad portfolio of assets.

To address the problem, crypto asset management systems are attempting to streamline the process by avoiding the use of a third party or manager to oversee users’ assets. These tools make it easier for average traders who don’t have a profound understanding of the market to get started and succeed.

There are a number of systems that promise to make asset management easier for crypto traders, and many of them have already proven to be effective. Muroch’s Blox, for example, makes it simple for customers to consolidate their many wallet and exchange accounts into a single spot.

The company’s solutions allow customers to manage various portfolios at the same time and feature automated syncing, ensuring that users’ transactions and purchases are always up to date. Furthermore, tokenization encourages users to use the site more. Traders can acquire coins by using the company’s portfolio tracking tools and can use CDT tokens to unlock premium features.

Others, such as Iconomi, offer more traditional asset management tools, allowing traders to design their own asset groups and combinations to match their risk tolerance. Another blockchain-based platform, Blackmoon, hosts a blockchain-based service that orchestrates tools for asset managers to manage client investments and retail traders to manage their own assets. Some organizations, such as Melonport, have taken a more democratic approach, allowing traders to participate in the portfolios and strategies of other players.

A New, Straightforward Horizon

Finally, bitcoin euphoria and adoption will be sustained only if newcomers to the market can simply join. Crypto asset management solutions provide a straightforward and centralized location for traders of all skill levels to manage their investments, and therefore a clearer path into the ecosystem.

The emerging asset class will continue to develop as these platforms become more mainstream and continue to defragment the already fragmented crypto exchange market. Nonetheless, their success is contingent not just on providing a single site to track investments, but also on serving as a hub for better understanding the overall market.

As platforms realize their limitations and seek partners that can improve their value proposition, consolidation may be the next frontier for asset management solutions. The bitcoin market will ultimately open up to much larger involvement from the entire internet investing community by establishing and promoting these highly synergistic platforms.

What do you think?

Written by Trevanna Gordon

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