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Investment Funds: Cryptocurrencies are becoming increasingly popular. They’re helpful for international trade, and others, like Ethereum, enable you to finish transactions using “smart contracts.” Despite the market’s steady ups and downs, it continues to be a haven for wealth and inflation.
So, if you are wondering why to invest in cryptocurrencies, the answer is that they can become the future currency.
To battle, the risks of investing in an exact digital currency with its risks, cryptocurrency investment funds have been created that take these assets into their portfolios but diversify them with other assets to mitigate risk.
When the Bitcoin bubble exploded, and it’s plummeting occurred at the end of 2018 (as seen in the previous graph), many investors in this cryptocurrency saw how much of their assets had suffered, even losing everything and getting into debt.
However, if we contribute to a cryptocurrency fund with a portfolio of Bitcoins, Ethereum, and other cryptocurrencies, some precious metals and equities (in their fair proportion, with their correlation measures, the strategically selected sectors, the companies with fundamental suitable, etc.) we would hardly suffer the risk of the fall of Bitcoin. We would be covered even if the entire cryptocurrency market were blown up.
Cryptocurrency Investment Funds
As Bitcoin falls, the money may end up in other cryptocurrencies, precious metals, and other strategic assets. The impact will be less because our portfolio is made up of assets that:
- For one thing, they are the same type. Although there is a strong association between the different cryptocurrencies, if Bitcoin falls, it does not mean that all cryptocurrencies can lose in the same proportion. It may be due to a problem unique to Bitcoin. The other cryptocurrencies can even be revalued, and we will win using diversification.
- Suppose the cryptocurrency market decreases in value across the board. In that case, we have assets in our portfolio that are sufficiently uncorrelated (or negatively correlated) to increase value and protect our investment losses. The risk is wholly or partially covered.
- If Bitcoin and other cryptocurrencies suffer a rise, excellent, with their volatility in a short time, we will earn a lot of money. In addition to the dividends of the shares in the portfolio.
The point is to discover the right balance in the architecture of the portfolio. This is work for a professional management team, an investment fund.
How to Invest in Ethereum from Spain?
In Spain, cryptocurrency investment funds incorporate these digital currencies and even use them as the main asset in their investments. The first Spanish fund to carry out these operations was Pheidon Capital, led by Eneko Knör.
Although you have other options of cryptocurrency investment funds to invest in, among others:
- Capital Blockchain.
- Crypto Fund AG.
Which Is The Best Strategy?
As always, know how to control the risk well.
How can we know, measure, and quantify the risk we assume? For this, you need a financial advisor. A Bitcoin advisor or cryptocurrency manager is more focused on the tax aspects.
Until very recently, because now some algorithms and programs act as such. It is about performing the same work in an automated way and, therefore, with lower costs.
I am referring to the Robo-advisors, capable of searching for the appropriate investment fund for the investor’s level of risk. I think it is better to explain it with an example:
Suppose an investor, a person attracted to cryptocurrencies, wants to invest in Bitcoins.
You can not ignore that there is a high risk. Nor can you afford to deposit your savings in an asset that leaves you in a compromised financial situation in a simple market correction.
This investor understands that the best way to hedge against market risk is diversification and professional management; therefore, he turns to a cryptocurrency investment fund.
But how do you know if that fund is the right one for your risk levels? And going further, how do you do your appropriate risk levels?
There are investment funds of all kinds, of all categories, that satisfy all investment profiles and tastes and those that incorporate cryptocurrencies into their portfolios.
There Are Several Types Of Cryptocurrency Funds
(whether or not they incorporate other types of assets in their portfolio):
- Those who invest directly in these financial assets.
- Instead of having a portfolio with Bitcoin, Ethereum, and other cryptocurrencies, other funds invest in companies whose business is related to this market.
- Funds that invest in other funds related to this market.
- Tangential investments are different related branches (such as technology).
How to choose the most suitable cryptocurrency Investment Funds?
In principle, you must carry out an analysis of the risk that you can bear. In this case, a “Robo advisor” (which could be translated as an automated financial advisor) can help you in the most economical way possible.
Thus, the robot advisor can perfectly build an investment policy, select assets, and make the appropriate portfolio once the risk has been determined.
In this way, our investor will have, on the one hand, an investment based on his preferences and his analyses; adapted, diversified, and with its assets in the correct correlation. On the other hand, your risk adjusts to your level.
But this is not all.
Professional investment fund managers also use Robo advisors to design, build and execute their portfolios, thus significantly reducing the cost of management fees.
How to Use Bitcoin for Beginners
Welcome to the fascinating world of Bitcoin, the revolutionary digital currency that has taken the financial world by storm. Whether you’re new to cryptocurrencies or simply curious about Bitcoin for beginners, this introduction provides a solid foundation to understand its key principles and features.
If we add the benefits of diversification, the possibility that a robot advisor will manage our investment well, and the cost savings that all this entails, investing in cryptocurrencies goes from being a high-risk operation to an investment adapted to the average investor.
Fund managers know perfectly well that this is possible with cryptocurrency investment funds.
That is why cryptocurrency investment funds appear on the market. These new appearances in investments are tremendously helpful because they can access these very aggressive markets.
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