What is a cryptocurrency fund
The digital currency industry attracts investors with large and quick earnings, which is possible only in the conditions of active development of a new industry. But not everyone is able to find the time and desire to explore a new market, investing in which is significantly different from investing in the stock, for example.
You can invest in cryptocurrencies by transferring your assets in trust to professionals. For this, special crypto funds have been created. We’ll talk about them today.
Cryptocurrency funds – organizations that provide services for trading and investing in digital currencies to private investors. A crypto fund is an analogue of investment funds, only its field of activity is limited to the cryptocurrency market.
Such organizations offer potential investors cooperation in which professionals will manage their investment capital. A team of experts in the cryptocurrency market will conduct operations with digital currencies, which, according to their analysis and opinion, can make a profit, which will be transferred to investors. Of course, this will not be free; crypto funds charge a fee for their services. Some funds charge a commission on profits, some on investment capital.
When applying to a cryptocurrency fund, the investor transfers his funds to trust, and the company undertakes to dispose of them in order to increase and timely pay the income. The responsibilities of the cryptocurrency fund include:
- Competent formation of an investment portfolio for a client;
- Search of potential earning opportunities;
- Choice of management strategy;
- Investment analysis;
- Risk assessment.
All existing cryptocurrency funds can be divided into two categories. Funds that invest exclusively in startups developed as part of the ICO. For such funds, profitability is determined primarily by the growing popularity of the company’s products.
Cryptocurrency hedge funds that deal exclusively with cryptocurrencies, and it is he who determines the profitability of the fund.
Why cryptocurrency funds are needed
With the growing popularity of cryptocurrencies, the number of people who want to invest in this young and rapidly developing sphere has also increased. But not everyone has a desire to study in detail the features of the market or enough time to conduct constant monitoring of cryptocurrencies. Almost daily, promising new currencies enter the market that can bring significant income when investing in the initial stages, but if traders with many years of experience can immediately appreciate the prospects of a particular cryptocurrency, then this is not always an obvious fact for beginners.
For beginners, cryptocurrency investment funds are a chance to invest with minimal risk, as professional traders are involved in the distribution of investment capital, and for investors with experience, this is an opportunity to reduce the time cost of making a profit.
The cryptocurrency market is rather unstable, due to this it is able to bring more income than the stock, but the number of force majeure situations in it is much higher. Professional traders can use this to their advantage, but for beginners it often carries negative consequences. One of the duties of a cryptocurrency fund is the proper distribution of finances and minimization of risks during course jumps.
Is it worth investing in crypto funds
If an investor is well versed in the world of digital currencies and the basics of trading, and also has the necessary temporary stock, then he does not need the services of an intermediary. In the opposite situation, cryptocurrency investment companies allow you to start investing in the world of digital currencies with minimal knowledge and time costs.
It is worth remembering that, in cooperation with a crypto fund, the investor loses part of the profit that goes to pay for the services of the company. Making assets in a cryptocurrency fund is a wise decision for novice investors that can increase capital and minimize risks, but you should carefully consider the choice of a trusting company. Unsuccessful investment activities of the company due to inexperience of management does not cover payments to investors. There are also cases when a financial pyramid is hidden under the disguise of an investment fund.
How to choose a cryptocurrency investment fund
In order for a beginner to organize a stable profit, you should transfer your finances to trust management for professionals. The professionalism of the company can only be assessed by analyzing its previous activities. When choosing a cryptocurrency investment fund, you should definitely pay attention to seven main indicators:
- History and achievements of the company. First of all, in order to assess the effectiveness of the investment fund, you should analyze the success of its work in previous periods. It is worthwhile to understand that when trading it is impossible to work completely without drawdowns, but their number and duration may indicate how the company management is able to cope with them and how correctly the investment portfolio is formed. The company’s experience in this field can also become a guarantee of professionalism.
- Team openness and statistics. It is good if the cryptocurrency fund provides full information about its team, does not hesitate to give real names and provides open statistics on its activities. Replacing this information only with promises and a description of the benefits of cooperation should alert a potential investor. Behind such a promising site may not be a productive investment fund, but a financial pyramid, which at any time can cease to exist, having canceled the capital of investors.
- Formal agreement of the parties. Collaboration is only with those organizations that provide the opportunity to conclude formal agreements between the parties. Otherwise, the investor remains defenseless in the legal aspect.
- Adequacy of the cost of services. Cryptocurrency funds are involved in commission fees. Some companies charge interest on profits, some charge a fixed interest rate on the entire asset, and a combined payment system is also possible. It should be understood that no professional trader will not work for a penny, and even more so for free. When choosing an investment fund, it is better to adhere to a profit sharing strategy with a team of professionals, rather than entrusting your funds to managing a newcomer, but at a more attractive commission.
- Strategic planning. Each crypto fund has its own developed strategy for earning. Many use the tactics of long-term investment in reliable projects with minimal risks, for others – risky investments seem to be mostly profitable. Each of the options has a right to exist, the success of which can be tracked by analyzing the existing experience of the fund. It is important that the strategy developed by experts is appropriate for the investor in terms of risk.
- Reputation. Before entrusting your finances to management, you should look for feedback from investors. It is worth paying attention not only to their content, but also to the style of writing and uniqueness. Identical reviews written in non-living languages from different users may indicate their falsity.
- Lawfulness. The cryptocurrency market is only developing and in many countries there is no legal regulation for cryptocurrency companies. In some states, cryptocurrency is prohibited, but somewhere it is gradually reaching the state level. When choosing a crypto fund, one should take into account the laws of which country it obeys and whether its activities are legal.
If the fund has an internal cryptocurrency, it will not be out of place to pay attention to its quotes, which also reflect the reputation of the company.
List of crypto funds
Blockchain Capital is a cryptocurrency fund founded in 2013 by Bart and Bradford Stevens and Brock Pierce. The fund operates in the United States and is subject to American laws. Mostly the fund invests in projects that may be useful for the development of blockchain technology. Among the company’s assets, you can find such high-profile projects as Ripple, Kraken, Coinbase, Wave, ShapeShift, BitGo, Civic and others. Fund fees are dynamic and depend on the amount invested, and there is no minimum entry threshold.
Pantera Capital is a long-lived fund that has been successfully operating since 2003. This is a venture investment fund founded by Dan Morehead, which since 2013 has been investing exclusively in the blockchain industry. The fund works on a strategy that brings moderate stable income and is famous for its professional team of traders and cryptocurrency experts. There is no visible entry threshold. In order to start cooperating with the fund, each investor should contact the fund team individually.
The Token Fund – tops the rating of investment crypto funds in the CIS countries. This is a mutual cryptocurrency fund founded by Vladimir Smerkis and Viktor Shpakovsky. For cooperation, the investor should purchase the platform’s internal cryptocurrency, profit will be accrued in proportion to the investments of each investor. There is no minimum threshold for entry, just like the need to identify a person.
TumbleBitTAAS Fund – the fund was founded in 2016 by the entrepreneur Ruslan Gavrilyuk. Cooperating with the fund, investors can expect a quarterly payment of 50% of the total income of the fund. Service commission is 25%, there is no minimum threshold.
The productivity of 75% of existing cryptocurrency funds raises reasonable doubts. However, with the right choice of an organization whose management has professionals, this method of investing is the easiest and most convenient for beginner investors. The distribution of finances through trust management is able to minimize risks for the investor, but you will have to sacrifice part of the income, which would probably not have been if it had not been for professional help.