原文标题：Crypto for Advisors: The Professionalization of Crypto
原文作者：Sarah Morton, Eric Ervin
原文来源：CoinDesk
Compilation: MK, Mars Finance
The specialization of cryptocurrencies is already a reality, whether it's tokenized securities, crypto forwards from the world's largest asset managers, or platforms that enable financial advisors to gain direct access to this emerging market.
In the world of cryptocurrency, there is a lot of knowledge to be mastered, and time is extremely limited. Eric Ervin, CEO of Onramp Invest, suggested what crypto investment model advisors should consider as clients' interest in crypto investing continues to grow. In an "Expert Q&A," ML Tech CEO Leo Mindyuk explores active vs. passive Bitcoin and other cryptocurrency investment strategies.
The tip of the iceberg: develop an encryption strategy without triggering burnout
My team and I have been discussing a major shift in the cryptocurrency market. Compared to a year ago, when people were talking directly to investors, pushing them to participate in a lot of exchange operations and self-directed investments, today we are seeing more focused attempts to support professionals. Undoubtedly, the specialization of cryptocurrencies is rapidly taking shape, whether it's tokenized securities, crypto forwards for the world's largest asset managers, or platforms that allow financial advisors to gain direct access to this emerging market.
This is good news for consultants. Not only does this mean that clients have wider exposure to a wide range of digital assets, but it also means that advisors can now launch new products in their business by providing the services their clients need and increase their assets under management (AUM). Companies that are equipped with access solutions will thrive. As we saw in the case of the Bitcoin ETF, the demand for cryptocurrencies is evident from investors, and this opens the door for advisors to the wider world of digital assets. However, despite the diverse demand for digital assets, cryptocurrencies are still only 1-6% of the recommended allocation in the portfolio. When 95% of your business book is traditional market funds, how do you keep track of every token or every leader in this 24/7 ever-changing market?
In traditional markets, there are professional asset managers who can manage these tasks on your behalf. Why not take advantage of the same tools to stay on top of markets you're not yet familiar with?
Apply familiar tools to unfamiliar markets
Just like in traditional markets, the use of SMAs is not meant to be a substitute for due diligence, they allow advisors to utilize well-researched strategies to maximize coverage of the best parts of the digital asset market. Let's explore in detail how RIAs are applying this legacy tool to new asset classes:
Five Ways Asset Managers' Cryptocurrency Strategies Can Be Beneficial to Advisors
- Diversification: The cryptocurrency model allows advisors to offer clients a diversified portfolio. This diversification helps to reduce overall risk by diversifying investments in assets with different risk profiles.
- Customization: Advisors can tailor cryptocurrency models to individual clients' specific investment goals and risk tolerance. They can adjust the composition of their portfolios based on factors such as market conditions, customer preferences, and investment strategies.
- Transparency: Many crypto asset managers offer real-time transparency into portfolio holdings and performance. This transparency helps clients keep track of their investments and understand how their money is managed, building trust.
- Professional management: Advisors can leverage the expertise and insights of leading asset managers to make informed investment decisions on behalf of their clients.
- Time-saving: Advisors don't need to spend hours on research because asset managers provide up-to-date market insights, automatic rebalancing, and thoughtful allocations, saving a lot of time and allowing advisors to focus on other important parts of their clients' portfolios.
Get the most out of this asset class for your clients
We all know that the saying "you can work harder with your money" has become a cliché, but when it comes to investing in digital assets, the same applies. Investing all your assets in Bitcoin is like putting all your money in one stock. The digital asset market is highly seasonal, which means that sometimes lesser-known cryptocurrencies or altcoins may outperform Bitcoin or Ethereum. When investors don't consider a comprehensive cryptocurrency investment strategy, they ignore the potential to capitalize on the market in a meaningful way. As a professional, you can now help them make the most of these opportunities by providing access to the broader ecosystem.
Meet the needs and build expertise
Understandably, it's normal to be intimidated by the amount of education required by cryptocurrency. Everyone has different needs and values. With an asset management strategy, you can face the market head-on and build knowledge in the process, while meeting demand and keeping your company relevant. This market is constantly evolving, and industry leaders, including Onramp Invest, are committed to keeping you ahead of the curve.
Expert Consultation
Q: What are the key differences between active and passive crypto investment strategies, and how do they affect risk and potential returns in a volatile crypto market?
In the cryptocurrency market, as in traditional markets, active and passive investment strategies offer two different approaches to portfolio construction and management. Passive investment strategies typically involve choosing a basket of cryptocurrencies and holding them for the long term, unaffected by short-term fluctuations in the market. This strategy can be achieved by buying crypto ETFs or holding a diversified portfolio, whether through a fund or a single managed account (SMA). This strategy often involves less ongoing management, lower transaction costs and easier tax treatment due to the lower frequency of transactions. In a highly volatile market environment, a successful passive strategy is often able to achieve returns close to its benchmark, for example, a Bitcoin ETF should perform very close to a long-term holding strategy, albeit accompanied by higher volatility and potentially larger drawdowns.
In contrast, actively managed cryptocurrency strategies aim to generate attractive absolute returns or outperform market averages by capitalizing on market inefficiencies and sophisticated risk management. Active strategies typically include continuous market monitoring, active risk control, higher transaction fees, and higher performance and management fees paid to professional asset managers. When executed correctly, active strategies can effectively mitigate volatility and drawdowns in an asset class, resulting in higher risk-adjusted returns. Actively managed strategies are diverse, adapting to different investment objectives and risk-return expectations.
In the challenging cryptocurrency market, choosing an active vs. passive strategy can significantly impact an investor's investment results.
Q: What types of active investment strategies are there?
For investors, there are a variety of actively managed strategies with different risk and return characteristics. For example, funding rate arbitrage, basis arbitrage, statistical arbitrage, and long-short and short-term directional strategies are all aimed at achieving absolute returns. These strategies are often complex, involve multiple quantitative approaches, optimized execution, and advanced risk management techniques, and often have a low correlation to cryptocurrency prices, enabling them to take advantage of market inefficiencies in emerging asset classes and achieve higher Sharpe ratios and lower drawdowns.
Another type of actively managed strategy is designed to outperform a specific benchmark, such as a Bitcoin buy-and-hold strategy or a market-capitalization-weighted buy-and-hold strategy. These strategies typically include certain return forecasts, market timing, and a risk management framework. When a strategy is executed properly, active management can lead to lower volatility and higher returns for investors than its passive counterpart. Investors can gain exposure to these actively managed strategies through fund structures or separately managed accounts in the cash and futures markets. Over time, more actively managed ETFs are expected to emerge for investors to choose from.