How does asset management work in the cryptoindustry?
Asset managers and investment consultants are constant participants in the financial market, offering capital owners to preserve and increase their savings. Depending on the amount of money and the owner’s appetite for risk, the ways to do this can be different: from illegal or near-financial (for example, pyramids), to “pure” investment instruments.
Small banks, private managers, young entrepreneurs and enthusiasts all rushed to the market back in 2017 to organize their funds and offer funds management services. And it is no coincidence, because 2017 was a good moment — cryptocurrency rates grew and showed super-profitability. And in 2020, Bitcoin has updated its historical maximum.
The variety of asset management tools can be classified according to different criteria. For example, depending on the entry threshold — for instruments with a low entry threshold or for large investors. Depending on the regulatory nature: registered by the SEC (or other financial regulators) or unregulated structures.
In addition, it is worth separating investment funds and trust management (TU). An investment fund can also be a hedge fund or venture fund (according to cryptofundresearch, the majority), a crypto ETF, or a private equity fund.
Crypto funds for big and small
Many funds in the cryptocurrency market work with small investors, the entry threshold here starts from several thousand dollars, and sometimes it can even be several dollars. These funds are looking for clients through online advertising, so their one-page sites are overwhelmed with marketing information.
In rare cases, in addition to loud numbers and slogans, there are specifics: investment strategy, managers and their experience, fund history. Investment declarations or white papers can also be published. Such funds promise huge returns — over 80% per annum.
For more serious players in the asset management market, focused on large investors, personal connections, sponsorships and performances by managers at events are becoming the main promotion tool.
The entry threshold for such funds is much higher — the cost of a share starts from hundreds of thousands of dollars. Fund portfolios are also more conservative: returns decrease in favor of reducing risk, as investors are often not ready to risk their entire capital.
From a security point of view, clients of funds officially registered with the SEC or other reputable regulators are most protected.
Who can you trust with crypto asset management?
Trust management is represented by managers who work with clients directly, not through the fund. This can be either consultation with trading solutions (Wealthcare), or a real remote control, implemented through a third-party account or API.
You can meet proposals for the trust management of small assets in cryptocurrency on specialized forums — for example, on bitcointalk.
The history of some private managers and customer reviews about them can be read on specialized forums. On Bitcointalk, the “traders” section in the Russian-language forum thread is included in the list of the most active. Here you can also find public reports of managers working with a small amount of investment.
As for the trust management of large assets, there is practically no information on this on the network. As with funds aimed at large investors, it all depends on private arrangements; legally, management is also supported by various types of contracts or through a legal entity.
So far, asset management in the cryptoindustry is at the very beginning of the journey. Therefore, the industry is characterized by strong market fragmentation, prevalence of gray schemes and unscrupulous participants, and a lack of information.
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