Crypto Asset Management: Definition, How It Works, and Goals

What Is Crypto Asset Management?

Crypto asset management is the practice of purchasing and selling digital assets to be used as investments while managing a portfolio to experience an overall growth in value. Asset management is not a new practice, but managing a crypto asset portfolio—or portion of a portfolio—has only become a necessity since cryptocurrency and other blockchain-linked digital assets drew the attention of investors.

Key Takeaways

  • Investors are increasingly looking to add crypto assets such as Bitcoin, non-fungible tokens, and other digital offerings to their portfolios for diversity and to capture some of the potential upsides of this new asset class.
  • Crypto assets are a growing class of investments; if you choose to invest in them, you'll find it's easier to use tools and apps to keep track of them all.
  • Crypto asset management platforms and tools help you take advantage of your assets without having to worry about the technical details.

Understanding Crypto Asset Management

Bitcoin made its debut in 2009; initially, there was very little interest from investors—until they realized there might be potential for gains following rising Bitcoin prices. Ethereum's introduction in 2013 gave the world another jolt by introducing a blockchain that was programmable and versatile. Eventually, people found ways to use blockchain to secure ownership of digital items, which gave those assets value.

Cryptocurrencies are only one of the types of crypto assets; as time goes by, more emerge. Use cases are only limited by the imagination; nearly every industry is researching ways to use blockchain and crypto assets to raise funds, streamline processes, reduce workloads, and cut expenses.

The rapid creation of tokenized tangible and intangible assets has created a need for tools to manage them as part of a portfolio. With a clear need present, tools have emerged to assist you in your crypto asset management endeavors.

Your favorite athlete, musician, or actor may be tokenized in the future and become part of your crypto asset portfolio.

For the entities behind these platforms, the incentive is also clear: where there is an opportunity, there will be a company leveraging it to make money. The market capitalization of cryptocurrencies exceeded $1.7 trillion in January 2022 and continues to grow. Moreover, other assets are also creating opportunities—non-fungible tokens were popularized in 2021. By January 2022, the asset class had a market cap of more than $23 billion.

Goals of Crypto Asset Management

Cryptocurrencies and other assets are easier to buy and sell than in the past. You only need to create an account on the exchange of your choice and choose a wallet that it supports to buy or sell crypto assets.

The ease in which you can access crypto assets means that it is essential to have a way to manage them, similar to the way you'd manage traditional investments in a portfolio. Many people and companies have recognized this need and created tools and apps that are now commonplace in more traditional financial markets—asset management apps and services.

Instead of managing multiple accounts and wallets from different exchanges while juggling traditional assets, crypto asset management platforms are simplifying the process by helping users consolidate their diverse holdings while simultaneously providing improved portfolio management tools.

Many of these applications use robo-advisors, which are artificial intelligence and machine learning-enabled (AI/ML) programs that can help you create your investment portfolios based on your goals; they also help you track and manage a growing number of assets. You can view your holdings' performance through charts and metrics, and the robo-advisor can help you identify opportunities to exchange assets for others that are performing better.

Any tangible or intangible asset can be tokenized through a blockchain. For example, shares of a company, fine art, jewelry, intellectual property, and even real estate can become crypto assets with shares offered to investors through tokens.

Even with AI/ML, many traders and investors prefer to manage their own investments. These new asset management platforms allow you to do this as well. These tools offer an easier pathway to entry and success for everyday traders who don't have a deep and thorough understanding of the crypto asset sector.

How Is Crypto Asset Management Different?

Crypto asset management is different from asset management only because it includes tokenized assets—any asset that has had value transferred to a blockchain. The platforms and apps give you more investing options and let you gain exposure to both traditional and emerging investment opportunities.

You're able to view your entire investing portfolio with crypto asset management apps, which keeps you better informed and able to make investing and trading decisions based on real-time information across all of your investments.

What Does Managing Your Crypto Assets Actually Mean?

Crypto asset management is the practice of tracking, buying, and selling assets that are tokenized through a blockchain to ensure you're getting the best portfolio performance possible.

How Do I Manage My Crypto Portfolio?

You can check each asset in your portfolio individually; however, crypto assets can come from many different places, so managing them can become quite challenging. It's easiest to use a crypto asset management app that lets you track your traditional investments simultaneously.

What Is a Crypto Asset?

A crypto asset is a cryptocurrency or asset that has been tokenized, which is the transfer of an object's value to a blockchain. The tokens can be fractionalized for broader distribution of ownership, much like dividing ownership of an asset into shares—but these shares are digital.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not own cryptocurrency.

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