Before discussing crypto fund management, let’s understand the concept of fund and fund management and see if they differ with or without the word crypto.
In this paper:
- What is a fund, what is a portfolio – with & without the word “crypto”
- What Finestel is & how it helps you provide crypto portfolio management services
- How you & your clients could use Finestel for crypto investment management
You could also use the table of content:
Table of Contents
Crypto Portfolio Management Compared to Portfolio Management
A portfolio could contain crude oil, AAPL (Apple Inc), a fine arts collection, a few funds, etc. However, crypto portfolio management could fall into managing bags of ETFs, NFTs, Defi, Altcoins, GameFi, etc. Although crypto portfolios and funds are much less diverse than funds & portfolios in the general finance and investment industries, we have no idea what other concepts will emerge from and will be brought to blockchain technology in the near future.
Because of the massive diversity, portfolio management is more sophisticated than crypto portfolio management. So, a portfolio manager is usually responsible for vast amounts of money or value, designing & deciding investment strategies, and sometimes even managing multiple fund managers.
Crypto Fund Management vs. Classic Fund Management
Classic funds also carry more applications than crypto funds, giving a broader range to fund management as a profession than crypto fund management as well.
In traditional or current – you be the judge – finance, a fund is a batch or a pool of money gathered for specific reasons such as investment, expense, maintenance, insurance, and so on. Although this definition fits crypto funds too, and hence the crypto industry is still at its infancy stage, you wouldn’t see as many use cases in crypto funds as traditional funds. Nevertheless, anybody can build a crypto fund for any purpose, and as long as they have a solid and reasonable investment strategy, they might profit, and people will invest in them.
Some crypto funds by type of investment and trading strategy:
Quantitative Crypto Funds:
AKA quant funds are the most prevalent actively managed crypto fund model. Order placements are usually done via computer programs called the trader bot or ATS (Automated Trading Systems) and are typically used for arbitrage, low-latency trading, and market making.
STOF (Security Token Offering Funds):
Security tokens investment is quite popular because they’re backed by a real asset and less volatile than cryptocurrencies. Also, they promise features that seem to secure and simplify our online activities.
Long-Short Crypto Funds:
A mixture of long & short trading strategies to make every market move profitable. These are the second most popular actively managed crypto funds out there and have double-fold risk & reward potential due to the nature of their trading strategy.
Long-Only Crypto Funds:
Huge return potential but in the long-term. These crypto funds are known as the third most popular among investors, and they usually contain early-stage tokens/coins/projects alongside highly liquid cryptocurrencies like Bitcoin or Ethereum.
VC Crypto Funds:
VCs (Venture Capital) love promising startups, and VC crypto funds love blockchain-technology innovative ideas and solutions. What these funds are looking after are not necessarily coins or tokens, and they’re focused on DLTs (Distributed Ledger Technology) as well.
DeFi Staking Funds:
DeFi is like mining crypto by locking up holdings instead of electricity and powerful processors or through PoS (Proof of Stake). These funds look for high-yield tokens, buy a bunch, lock ’em up for a period, and earn rewards.
The typical intent of investing in a crypto fund is profit. Investors who prefer not to get involved in crypto trading, nor want to fall behind profiting off the newly emerged market, might be the perfect investors for crypto funds.
Learn about crypto asset management on one dashboard right HERE.
The primary purpose of crypto funds – of any kind – is to provide simple yet profitable and secure crypto investment solutions for crypto investors and enthusiasts. Each of the examples you read above could be lucrative. Still, since every fund follows a different investment strategy, you want to ensure the fund you’re investing in matches your financial conditions and preferences.
What is Finestel and How to Use it to Build or Run All Your Crypto Funds on One Dashboard?
You can build your crypto funds on Finestel, manage your clients and their accounting, and scale your business.
Finestel is the command center of your Binance and KuCoin accounts or sub-accounts via API connections. If you don’t know, an Application Programming Interface (API) is a connection between 2 or more apps, software, computers, and alike. When you tap on the YouTube app icon on your smartphone, it connects to a YouTube server via an API connection.
Finestel connects to your Binance or KuCoin account through read-only and trade-only API connections, and the API configuration depends on the function you expect from your Finestel account. Traders, crypto funds, portfolio, and asset managers connect their exchange accounts via read-only, and their investors connect via trade-only API configurations – more on both of them further below.
By the way, Finestel currently supports Binance futures and spot and KuCoin spot market only. More popular crypto exchanges and market types will be available on Finestel shortly, so stay tuned.
What is Finestel?
- Crypto asset managers
- Crypto portfolio managers
- Crypto fund managers
- Funds’ private clients
- General crypto investors
The trader and investor accounts are, in fact, exchange accounts or sub-accounts that you connect to your Finestel account. The function of the connected exchange account depends on the account’s API configuration and how you define it on Finestel before connecting.
Binance or KuCoin trader accounts, which connect via read-only API access, are what Finestel will read & copy from. Binance or KuCoin investor accounts, which connect via trade-only API access, are what will receive the copied orders from the copied trader’s exchange account proportionally.
What Does Proportional Order Replication Mean?
It means the size of orders the investor exchange accounts receive are placed relative to each investor’s account balance. Also, the investors don’t need to have the same account balance as the copied trader, and they could simply go in with less or more balance. For example:
Assume I have 1,000 USDT in my Binance account and copy a trader who trades with a 10,000 USDT Binance balance. If the trader places a 1,000 USDT worth of Bitcoin buy order (10% of their balance), Finestel will replicate the same order into my Binance account “proportional” to my 1,000 USDT Binance balance. As a result, I’ll receive 100 USDT worth of Bitcoin buy order.
Build Your Crypto Asset Management Fund – Crypto Portfolio Management Firm on Top of Finestel
All you need to do is go to your Binance or KuCoin account and create an API access. To configure read-only API access, which is for connecting trader exchange accounts (the crypto asset management side), you just need to leave the API restrictions as default.
The default “API configuration” on most crypto exchanges is read-only (“Enable Reading” on Binance and “General” on KuCoin). But the default “IP restriction” default is “Restricted” (it’s the “Yes” check box on KuCoin), which you and your clients must switch to the unrestricted option. IP addresses might change, and if you leave this option on the default, your Binance or KuCoin account will lose connection to Finestel.
On your Finestel account, find the button to connect a new exchange account – no worries, you’ll find it; it’s everywhere – and on the connecting an exchange account page, select your exchange account, and hit the connect button.
Pick a username for the exchange account (this will also be your name if you upgrade to public), and select the account role as “Trader.” Copy and paste your new API’s key & secret and hit the connect button.
Within 60 seconds, Finestel connects to your exchange account, and you see your exchange account balance on your Finestel dashboard.
Private & Public Finestel Trader Accounts
Now Finestel can copy your Binance spot & futures trades or your KuCoin spot trades and replicate them into exchange accounts that copy you (Finestel investor exchange accounts). However, your newly connected trader exchange account is private, and no Finestel investor can see it.
Private trader exchange accounts are for crypto asset managers who want to provide crypto asset management services to their private community of investors only using their Finestel profile link.
In contrast, there are “Public” connected trader accounts, which Finestel will list on the “Explore Traders” page and are available for Finestel investors to invest in or copy. Public trader exchange accounts also receive free promotions through Finestel social media posts; like the video below:
To upgrade your account public (no-charge), go to the “Accounts & Stats” menu on your Finestel dashboard and hit the “Go Public” button on the top right corner of the page, and you’re good to go.
By the way, whether your account is public or private, embed your Finestel profile link on your social media channels, website, or blog to gain investors.
You Are Almost Done
So, from here on, you will be able to arrange various crypto portfolios and funds on multiple exchange accounts or sub-accounts, connect them to Finestel and make them available to copy publicly or privately. Each of those connected exchange accounts or sub-accounts are funds in which crypto investors can invest.
If your crypto fund profits, your investors’ exchange accounts profit as well, and then they must pay you for your crypto fund management services via performance fees. And it just doesn’t end there.
You Can Copy Yourself; And Why?
You are able to connect up to 10 exchange accounts or sub-accounts to your Finestel accounts with different functions (trader or investor). Request for more, and after a review, we can give access (it depends on your reason, honestly) to connect many more accounts to your Finestel account.
Why would someone connect 10 exchange accounts to Finestel? Because they want to manage 10 Binance or KuCoin accounts (imagine a friend & family crypto investment fund) but using only one of them.
Or, if you have investors who don’t have the time to spend on Finestel, by giving you the trade-only API credentials, you can connect them to Finestel as an investor and copy your connected trader account.
Crypto Portfolio Management Industry’s Challenges
When you start using Finestel, you’ll notice a super fast and accurate order replicator.
However, much more is happening in the deeper layers than you see on the surface. Finestel uses a sturdy replicator engine for reading, copying, and placing orders proportionally, but it does some other exciting stuff that perfectly solves some of the worse copy trading issues.
Optimizing Price Slippage
Price slippage is when a crypto fund management platform sends a massive pool of market orders to a crypto exchange that cannot provide enough liquidity. The lack of liquidity causes the price to jump or drop, so most of those orders will execute at different market prices.
A retail crypto investor may monitor the trades they’re receiving and try to run the same trades with their major assets on another account via an other crypto copy trading service or manually. Hence they think they can ditch their asset managers’ performance fee. But Finestel is able to detect it and ban the investor from Finestel.
These are two of the most severe challenges that crypto fund management platforms are involved with currently, plus a few more, such as various fees & limits, market type limits, connected accounts limits, and so on.
We’re will publish our upcoming product updates day by day.
What Your Finestel Crypto Fund Can Bring for Your Clients
We talked so much about the crypto portfolio management side of the Finestel and how to make your crypto portfolio management services to the public and your private community.
Let’s take a trip to the investor side and see how people can invest in your crypto asset management funds or use your crypto portfolio management services.
Investor exchange accounts connect via trade-only API access, like below:
Binance investor exchange accounts:
- “Enable Spot & Margin Trading” to copy Binance spot market traders
- “Enable Futures” to copy Binance futures market traders
KuCoin investor exchange accounts:
- “Trade” to copy KuCoin spot market traders
Also, on the “Connecting exchange account” page, investors must select “Investor” as the account role, and the rest of the process is the same as on the traders’ side.
Once investors connect their exchange accounts and deposit the minimum service fee ($29 per copy per month), they’ll be able to copy your Finestel crypto fund, which is one of your connected exchange accounts or sub-accounts.
Briefly and a bit proudly, we’ve tried our best to build the best SaaS platforms for crypto fund management and will keep improving it forever. What Finestel can do cannot fit in a line or paragraph, and we may soon break down all its abilities in a dedicated article. For now, Finestel is one of the best crypto trading portfolio management platforms available; use it to experience a fully automated crypto accounting system.
Frequently Asked Questions
What is crypto asset management in crypto?
Managing various asset classes on a big scale is called asset management in the finance literature. In the crypto-verse, crypto asset management refers to managing multiple crypto funds, assets, and/or portfolios by a firm or a person.
How do I manage my crypto portfolio?
Several “crypto portfolio tracker” platforms, applications, and websites can help you with that. Our platform helps you manage multiple portfolios you probably have on different exchange accounts on a single straightforward dashboard for yourself or your clients.
What does a crypto asset mean?
Any type of cryptocurrency coin or token is a crypto asset. Cryptocurrencies are far from just cross-border payment utilizers and Dapps nowadays. So, for instance, the NFT outfits & skins you buy for your play-to-earn game are now crypto assets and need to be managed by either you or a professional.
What is crypto market analysis?
Market participants usually perform analyses before buying or selling any asset class. These analyses are in different forms, such as technical, fundamental, quant, or on-chain – specifically for UTXO-based crypto assets, you could use one or all of them to get a more accurate outcome.
Which is the best cryptocurrency investment platform?
Probably Binance, since it’s the largest cryptocurrency exchange in terms of daily volume and has many crypto assets to buy or sell. However, there are many other factors to consider for choosing the best crypto investment platform. One of which is if using the platform is legal in your region.
Is there a crypto portfolio manager?
Yes, there are crypto assets, portfolios, and fund managers in the crypto verse to hire. Crypto investment managers are usually expert traders who provide you with their services in return for a share of your profit and/or a fixed subscription fee.
Which crypto platform has the lowest fees?
Among crypto exchanges, Kraken, FTX, and Binance are known for having the lowest fees. However, trading fees are not the only fee you pay on crypto exchanges. Some exchanges also have withdrawal or other fees, which vary from one exchange to another.
Who are the best experts in cryptocurrency?
There is no solid answer to this question, probably CZ (the founder & CEO of Binance) or Sam Bankman-Fried (the founder & CEO of FTX). Cryptocurrencies and Blockchain technology, although they are getting mature day by day, they’re still in their infancy stages. Given that, not so many people are considered knowledgeable or experts in the field.
Which is the best cryptocurrency to invest in, in 2021?
Bitcoin & Ethereum, probably, but it depends on your risk appetite a lot. The cryptocurrency market is highly volatile and super risky. So, a good crypto investment greatly depends on your investment strategy and risk profile. Some tokens may gain multiple times compared to BTC or ETH but may also vanish in hours.