Investing in a new asset class
This article was written by Isonex Capital for newcomers to discuss digital currency index funds.
It has long been established within traditional investment markets that index fund investing is a rewarding strategy for those seeking favorable long-term returns. It is the fastest growing segment of the global investment market, with good reason. Unlike active hedge funds, which require an active fund manager to oversee your investments, index funds use a passive investment approach, not trying to beat the market but to perform inline with the market average. This has proven to be a very cost effective investment model.
These same strategies and benefits also apply to index funds within the cryptocurrency market. Index funds can make all the difference due to the volatility currently experienced in this emerging market. With this approach short-term setbacks and even sharp downturns are of no concern because over the long term the market always returns to green.
One obvious incentive to investing in the cryptocurrency market now is that investors stand to make phenomenal returns if betting on the winning coins at this early stage. But how do we go about identifying which currencies will succeed and which will not. With an index fund, we don’t have to predict the future of any one particular cryptocurrency. We are investing in the broader crypto market as a whole.
Some investors like to fly by the seat of their pants, the exhilaration of playing the markets can be addicting. But for the majority of us investing is about topping up our retirement fund or putting our kids through university, With this in mind index funds are the more cerebral choice, one that lets us pursue our goals without having to chase market trends and constantly make adjustments.
Despite the markets volatile swings, we have seen phenomenal growth in cryptocurrencies. In the last 18 months the market has experienced gains of over 1000%. It should be noted that these growths were previously driven predominantly by speculation, as well as investment in the blockchain.
Bitcoin, while currently down from it’s all time high of nearly 20k USD in January 2018. At its current price of around 6k USD, it has clearly experienced tremendous growth from the 880 USD in January 2017. These gains are especially impressive when one considers that in a long downturn it appears to have stabilized around that figure.
When the innovative technology that some cryptocurrency projects are developing is fully integrated into their respective markets, the potential for growth could be incomparable.
Leading global financial institutions such as NASDAQ, Goldman Sachs and ICE (the parent company behind the NYSE) to name just a few are creating cryptocurrency trading platforms. These established institutional exchanges come at a price, requiring upwards of a 100,000 USD minimum investment. With the media once again declaring crypto dead, such bullish indicators would suggest otherwise
Governments worldwide have begun to take an interest in this space and the blockchain technology that underpins it. Policy makers are attempting to draw up regulations and controls on this continously evolving market, no small task.
Other influential parties have taken notice such as the G20, the IMF and the OECD to name just a few. These organizations have also been giving cryptocurrency and blockchain serious consideration regarding regulation and policy. When regulators do give clarity and legitimize cryptocurrencies, this asset class will explode. That’s when we’ll see much anticipated ETFs and institutional investment enter the market, leading to a multi trillion dollar market cap.
There are a number of benefits to buying into cryptocurrency index funds rather than buying the cryptocurrencies themselves. The biggest reason for many people is that it’s just easier. If you are not tech minded, the learning curve for entering the crypto market can be overwhelming. The challenges in navigating the myriad of exchanges and wallets to maintain a cryptocurrency portfolio can deter potential investors from capitalizing on this opportunity altogether. With a cryptocurrency index fund you don’t have these concerns as the assets are managed for you, so you never have to deal directly with the cryptocurrencies you own a share of.
Below are a few key points on market opportunities.
- Cryptocurrencies look set to be the currency of the future. Just look at the recent devaluation of fiat currencies which has led many to scramble for crypto’s as a safer option to secure their savings and rebuild the economy.
- Cryptocurrency investment exchanges and trading platforms are being created by major financial institutions across the globe. For example,ICE is launching the Bakkt exchange in November. The US Federal Reserve and other central banks are showing an interest in cryptocurrencies
- Cryptocurrency funds offer higher returns. The last bull run in crypto was driven predominantly by speculation. But as the utility and real world use cases of cryptocurrencies gain prominence enticing institutional investment, the next bull run could see serious gains for the long term investor.
There is another advantage to having a third party manage your funds: security. The organizations that spearhead investment funds manage millions of dollars in digital assets. Therefore they absolutely must take the proper precautions in keeping your assets safe. Most cryptocurrency funds keep all of their holdings in offline hardware wallets, which ensures that hackers or other malicious actors on the internet cannot access the funds capital.
At Isonex, security is in line with leading industry standards. All currencies are reserved on secure offline servers, including multiple tamper proof hardware wallets held offline in secret locations. Holding digital assets on an exchange could result in a counterparty risk to the exchange, Isonex will mitigate this risk by distributing holdings across multiple exchanges during rebalancing. We have in place a detailed business disaster recovery plan designed specifically for expected and unexpected circumstances that could jeopardize the security and operations of the fund.
Retail investors could unknowingly have their computer compromised, fall victim to an exchange attack, or even lose their funds altogether in a faulty transaction. But with a cryptocurrency asset fund, you have peace of mind knowing that the fund is taking every precaution to protect your assets, lest it compromise its own financial legitimacy and reputation.
Index funds, also known as smart beta: protect investors from the risks of investing in a volatile market. The portfolios of index funds are diversified by including a variety of cryptocurrencies which are chosen depending on the indexes preferred methodology.
The IX15 equal weighted index fund spreads your token investment across the top 15 cryptocurrencies set by market cap. So instead of going all in on one asset, your portfolio is spread out over a wider diversified investment strategy. The IX15 token holds over 75% of the market. We perform a regular rebalancing schedule which ensures you always hold the top 15 cryptocurrencies no matter what happens to any individual cryptocurrency.
IX15 token holders who invest during the token sale will have the option to partake in scheduled automatic re-investments making it easier to top up their investment every month.
Another benefit compared to holding cryptocurrencies in some exchanges is that the stakes and forks earned by the fund for holding cryptocurrencies are reinvested in the fund. This ensures that you and not someone else, get the financial benefit of holding those cryptocurrencies.
At Isonex we firmly believe that the comprehensiveness and simplicity of a cryptocurrency index fund is key to unlocking the most value for consumers. It is a low cost, low risk way for investors to buy into the market and achieve a high level of diversification with a single token.
As the crypto world awaits regulation and clarification. Things are changing at such a rapid pace that what is relevant today may not be relevant next month. Investors who protect their assets with a well considered strategy should realize substantial rewards throughout the rise of this new asset class.
Eliminate the guesswork by adopting a safe, diversified strategy
**Isonex Capital is dedicated to the growth of digital currencies within the global marketplace and in facilitating investment into the blockchain ecosystem. We strongly believe in investor protection through security and transparency. We are committed to helping newcomers gain an understanding of the risks involved in this new asset class. If you would like to find out more about us, visithttps://isonex.io