Crypto

Cryptocurrencies: advantages and disadvantages of investing directly or in funds

Cryptocurrencies have been standing out in the market. Among the advantages of investing through funds, experts cite practicality and safety. On the other hand, the asset class has fewer crypto options for exposure as well as management fees.

Many investors will gain one more option to invest in cryptos. Today, the total number of cryptocurrencies on the market exceeds 9,300, according to information from the Coinmarketcap platform. Among them are BTC, ETH, XRP, ADA, and DOT.

Each has specific skills. AAVE, for example, is a decentralized finance (Defi) protocol that allows users to borrow and borrow cryptocurrencies. In this way, lenders earn interest by depositing digital assets. Meanwhile, borrowers can use their crypto as collateral to take out a loan paying interest.

Analyzing each of the cryptocurrencies is not an easy task, which makes investors seek help to break through this investment universe. One of the ways found to get a helping hand with applications is thematic investment funds.

The asset class, as its name implies, invests in a certain segment, such as cryptocurrencies. The investor has twelve thematic crypto-asset funds available. Five are aimed at small investors and the remaining seven are aimed at qualified and professional investors.

Advantages and disadvantages of funds

When investing in funds, you don’t have to worry about taking custody of your cryptocurrencies, nor about the possibility of losing your wallet password and thus having your assets blocked.

An advantage is a practicality that the investor has to access the funds through the same platform through which he invests in the other asset classes. This possibility facilitates the consolidated view of your investment portfolio. Today there are many paths that can be taken to increase the portfolio, for example, affiliate marketing such as that offered by Algo Affiliates. Bitcoin is certainly one of the popular routes.

For some experts, one of the main benefits is not having to worry about the custody of your crypto assets. When the investor decides to keep the assets with him, the individual needs to understand that it is necessary to adopt security measures to avoid permanent losses. In general, when opting for investments through funds, the investor has at his side professional management that chooses the assets for him, therefore, he has more potential to monetize.

On the negative side, funds tend to have fewer asset options for exposure than direct investment. In addition, they do not allow shareholders to use the crypto-assets for their holders, such as transfers.

With active management, the investor is less likely to have problems. However, this convenience has costs, given that hedge funds have an administration and performance fee. Even so, for investors who do not want to spend part of their day thinking about the safety of their assets, funds continue to be the best option to invest in this market.

Direct investment

When the investor accesses a crypto exchange (stock exchange), he has at his disposal a large number of coins to invest. The main advantages of applying directly are:

– Autonomy: The investor has several crypto options to invest in. This gives the investor autonomy to be exposed to an asset at 100% of its variation.

– Fees: Just like mutual funds, exchanges also have fees. However, the director explains that, depending on the volume of operations, it is possible to obtain cheaper rates.

– Freedom: Unlike funds, which only allow investments on weekdays, exchanges allow investors to operate whenever they want.

– Liquidity: To withdraw money from investment funds, it is usually necessary to wait a certain period, which varies according to the fund. On the exchange, from the moment you redeem, this feature is already in your account instantly.

The advantage of being able to be 100% exposed to a particular crypto asset can also be a problem, as volatility is very high. You end up taking a position on the exchange where you can lose your capital.

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