Top 5 Factors Every Crypto Asset Manager Should Consider

Top 5 Factors Every Crypto Asset Manager Should Consider

By Abhishek Bajaj

In recent years, advances in blockchain technology have sparked a huge interest in cryptocurrencies and the potential of decentralized finance, also known as “DeFi”. As crypto gains momentum, we see a naturally growing demand for reliable investment options in the DeFi space.

To meet this demand, investment brokers and hedge fund managers are expanding their services into a whole new area – “crypto asset management”. Also, due to the inclusive nature of this space, more and more people are trying to start crypto funds. The most exciting of these are the new era crypto specialists known as “DeFi-Heads”!

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But while there is a lot of excitement in this space, there is also a serious lack of understanding of cryptocurrency and the underlying principles of blockchain technology. Because of this general ignorance, investing in crypto and DeFi becomes difficult, even dangerous! To avoid a bad experience, there are some unique nuances of this space that asset managers should consider. Note that the basics of traditional asset management (such as trend analysis) apply even in the crypto space. However, it is important to know the following factors to stay risk-free and have an edge in the market!

  1. Understanding the flow of money: Cryptocurrencies show strong correlations with world events and not seeing the big picture will lead to biased strategies. Crypto markets are influenced by multiple characteristics such as regulatory decisions and large-scale adoption (such as by Tesla or El Salvador). Even in the crypto space, we see a strong correlation between Bitcoin prices and the rest of the market (known as the “alt market”). Therefore, find out what the pivots of the price movement are and take advantage of the corresponding changes. In crypto, if you can estimate the flow of money, you can predict the market like a stack of dominoes!

2. Exploring Tokenomics: The beauty of cryptocurrencies is that the internal mechanisms that generate value are fully visible to all. Research Tokenomics and Revenue Models Before Investing in a Crypto Token. The supply and demand of a cryptocurrency is highly dependent on its tokenomic framework and utility. Capturing this fundamental relationship between token price and structure can reveal hidden alpha!

3. Community Participation: The crypto community is a unique space where top industry leaders freely share their knowledge and interact with the masses. Using advice from expert investors and DeFi scholars can accelerate your own growth and understanding of the crypto space. Twitter, Medium, Youtube and other social media platforms are your best friends! Interact, communicate and learn with top managers and technicians. Remember that the crypto ecosystem is a socio-financial machine and neglecting the social part is not advisable!

4. Risk Management: Cryptocurrencies are perhaps the most volatile asset on the planet! Protect your capital first and seek profits later. A strategy that includes downside protection, stop loss and profit taking policies will be able to survive strong crypto bear markets and thrive during bull cycles. Make decisions only based on strategy, not emotion! While these principles are common in traditional markets, they are even more imperative to a successful crypto strategy.

5. Protect your crypto: While most managers focus on their strategies, few focus on the technical side of managing their assets. Crypto is highly vulnerable to phishing, hacking and exploits. Always protect your cryptocurrency in hardware wallets or custodial services. DO NOT click on links you are not sure about and do not trust anyone who offers

all free or discounted services. Cybersecurity is perhaps the least valued principle of cryptoasset managers, but it is perhaps the most important!

The author is a co-founder of DeFiVerse

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