Navigating your way around the world of crypto isn’t for the faint-hearted. This fast-paced, hi-tech environment offers a potential digital gold rush for the most savvy. But it’s fraught with potential hazards along the way.
That’s why leveraging some of the best services available to you as an investor is vital.
The good news with cryptocurrency is that a wealth of valuable and vital services could make a massive difference to your investment strategy.
In this article, we’ll explain twelve distinct hedge fund services. Read on to learn more.
1. Asset Management Services
Most people will dabble in crypto investment and buy what they want directly. But there is another option available, and that’s the traditional asset management model.
Crypto asset management involves having a dedicated team or professional. This person or group will choose and oversee a crypto portfolio for you. They’ll aim to build assets that suit your risk tolerance and long-term money goals.
There is a clear advantage in going down this route. Cryptocurrency is a fast-evolving financial landscape with high stakes.
These services mean you have a knowledgeable asset manager taking on that responsibility and managing your risk. They can use their financial expertise and crypto knowledge to maximize your investment.
You’ll get crypto asset managers with a range of specialist knowledge. You could choose services from a team with in-depth knowledge of famous currencies like Bitcoin and Ethereum.
Alternatively, you could choose one with equal knowledge of newer and more niche currencies.
Whatever specialist you choose, you’ll get a service from a team who follows essential market trends. They’ll also have other handy skills, such as know-how on regulatory frameworks.
2. Risk Diversification
We’ve already touched on risk management as an aspect of asset management. Even so, risk diversification services exist in their own right. So it’s worth introducing them here.
Risk diversification is a specialist service, a subset of asset management.
It exists in other areas of financial management, like equities, bonds, and real estate. You use it when your primary aim is to mitigate your crypto investment risks.
The service helps you spread your investment across a range of cryptocurrencies. That helps reduce the risk exposure that you might have if all your money sits in one cryptocurrency.
So how do you find this type of service for cryptocurrencies? One option is to research hedge funds. These will offer a balanced portfolio.
Alternatively, you can use automated digital services that use AI-powered algorithms to help you manage risk. You might see these referred to as robo-advisors.
Risk management is especially beneficial in cryptocurrency markets. These assets tend to be more volatile than other financial products.
3. Algorithmic Trading Services
Algorithmic trading involves complex models to automate your trades. With these services, you’ll access sophisticated software powered by advanced algorithms. Many also have AI capabilities.
The rationale behind these services is that AI is more advanced than human analytical skills. Using this technology, you can maximize your returns when buying and selling cryptocurrencies.
They work because these services come with pre-defined rules and strategies. So they will also make the trade when that condition is met. You aren’t at risk of human errors like a delayed transaction or failing to spot a market change.
Plus, they operate 24/7, so you never have to wait for the market to open. That’s something that’s a limitation of more traditional financial products like shares.
It is also high-frequency. These trades happen in a split second, helping you operate at the pace of any live market movement.
As well as a hedge fund service, you’ll get these algorithmic solutions at many leading online trading platforms and crypto exchanges. Some trading crypto funds also use these algorithms.
4. Blockchain Analytics Services
Blockchain analytics refers to tools and techniques for monitoring blockchain networks. Some crypto-specialist firms offer this as a service to investors.
The service allows them to access analytics that track trends, patterns, and anomalies. By tracking this level of data, an investor can make better decisions about their trades.
Analytics tools can help you watch thousands of data points in real time. That would be impossible to do manually.
If this service suits you, search for hedge fund firms offering specific analytics platforms. You want ones allowing you to track your assets and highlight risks.
These services are also valuable for financial managers. Asset or hedge fund managers can use analytical tools as part of their approach to monitoring a portfolio of cryptocurrencies.
The crypto world will evolve into something more complex and fast-paced. So these analytics services will become more of a must-have.
5. Staking Services
Staking services are where investors stake crypto coins within a network. It locks that investment into that network for a specific period.
When you do that, you can earn more coins or other financial rewards. It’s like the way long-term savings account earn interest.
Staking services operate for Proof of Stake cryptocurrencies. You might see this referred to as PoS or PoS variant crypto.
The service manages the technical part of the process once the investor has made the stake. That includes paying out any earnings or other rewards owed to investors.
These services give you another way to earn off your cryptocurrency instead of trading. They are generally lower risk and a better choice for a long-term investment.
It’s useful for those who want a passive income from an initial investment without having to monitor the financial markets constantly.
6. Initial Coin Offering Services
Initial coin offerings are more commonly known as ICOs. Under this umbrella, you’ll also find IEOs (Initial Exchange Offerings) and IDOs (Initial DEX Offerings).
These offerings are all fundraising options for cryptocurrency projects. These services help investors understand the projects and manage the investment process.
You’ll find these services offered by hedge funds and consultancies specializing in cryptocurrencies. It’s something that specialist crypto legal firms also support. Together, they provide due diligence and investment advice.
They are essential for anyone investing their money in new cryptocurrency projects. You’ll get information such as the team’s expertise, the technology, and the market potential.
That’s invaluable because these are often high-risk ventures with sizable financial investments.
It will help you as an investor make an informed decision before you part with your money. And by using reputable companies, you can avoid becoming a victim of scams or fake cryptocurrencies.
7. Derivatives
Derivatives are financial products that get their value from the underlying assets. They are common in traditional financial markets and have emerged in crypto markets.
Derivatives can take many forms. You may see futures, options, and swaps, for example.
Derivative services from hedge funds for crypto assets provide support, financial advice, and management for investors. You’ll also find services that offer derivative trading.
Yet, these are complex products, and it’s worth getting the advice of a professional. Or you can pay for managed services and get an expert to oversee your trading.
Investors like derivatives because it helps them hedge against potential losses and trade on a future price movement. It’s useful for advanced traders who want a more sophisticated trading strategy.
However, traditional derivatives do come with high risks. And that risk is even more pronounced for cryptocurrencies. So make sure you fully understand these products before using derivative services.
8. Liquidity Provision
A liquidity provision service helps ensure massive trades can happen smoothly. It stabilizes an otherwise volatile market. In other words, it protects against significant price fluctuations for that asset.
This service happens via liquidity providers or the leading cryptocurrency exchanges.They deposit tokens in liquidity pools. That keeps transactions smooth and steady.
High liquidity is always essential when investing money. It means you can quickly complete large trades without worrying about the risk of a massive price drop.
It’s a vital service for major institutional investment groups. They need to be able to trade massive numbers without causing wider disruption to the market.
9. Decentralized Finance Yield Farming
Cryptocurrency offers new and innovative ways to make money from an investment. One of these strategies is known as yield farming. That’s where investors stake or lend crypto assets.
In return, they earn rewards in the form of extra tokens. It’s a straightforward option for those investors who don’t want the risk of trading but want to make money from crypto assets.
The setup uses specific decentralized finance protocols. They are a signature feature of cryptocurrencies, and the protocols help maximize the returns.
You’ll need to find a specialist hedge fund or platform that automates the process to access yield farming services. But you must look at one with an established and trustworthy reputation.
Always do your research before making a financial investment. Much of this industry is still relatively unregulated, so go with a well-known company with a long-standing crypto history.
10. Tax Optimization Services
As with any financial investment, you need to understand the tax implications. That’s where tax services come in, and tax optimization is one such service.
These services will guide you on the tax implications of your cryptocurrency investments. They’ll help guide you on what tax you pay when making trades, investments, and other transactions.
These services are typically offered by tax consultants at hedge funds with specialist knowledge of the cryptocurrency market. They will also be familiar with many tax software tools to help you manage your financial commitments.
These tools will track your trades, calculate your tax based on the gain or loss, and generate reports for you.
This service is crucial for helping investors understand and abide by their tax obligations. It will help you avoid paying too much tax or getting into trouble for not paying enough.
Professional services will be a worthwhile option for frequent investors because of the potential money it can save.
11. Crypto Custody Solutions
One issue that every crypto investor faces is where to store their assets. When buying cryptocurrency, you need a safe and secure place to put these digital purchases.
That’s where a crypto custody solution can help. It’s a service to manage and securely store your cryptocurrencies. It prevents your valuable crypto from falling into the wrong hands through theft or hacks.
These storage options are custodians. They are like a bank with private security deposit boxes. However, the setup is far more sophisticated and advanced.
It involves the most modern technology, including digital-signature wallets and encryption. It means you get some of the best protection available.
Some of the most reputable hedge funds, crypto exchanges, and fintech firms will offer custodian services. They will also have other essential features as part of that service. That might include insurance and regulatory compliance.
Using a proper crypto custody solution should be part of your risk management strategy. It is the best way to keep your money safe.
12. Regulatory Consultancy Services
Regulation in the cryptocurrency market is still in its infancy. But it is going in one direction. One of the challenges you face navigating the crypto market is understanding the latest wave of new regulations.
That’s where consultancy services can help. They can provide services such as compliance support. They’ll ensure investors are informed about their duties and know about any upcoming changes to the law.
Specialist legal teams at hedge funds often provide these services. These companies should have an in-depth understanding of crypto technology and the law.
Staying compliant is vital. You risk severe penalties if you don’t understand the law or fail to comply. Always use the proper support services when investing in crypto, and stay abreast of regulation changes.
Hedge Fund Services for Crypto
Navigating the crypto world can feel overwhelming and complex at times. You must reach out to reputable experts who can offer these hedge fund services.
Some of these services will help you reduce your financial risk. Others are there to maximize your gains. And some will help you navigate other aspects of investment, such as tax and regulation.
Now that you understand the value of these crypto services, we invite you to discover what’s on offer at True Code Capital. Our fund will help you turn crypto from a complex asset into an opportunity.
