Cryptocurrency as an asset class has been gaining momentum in the last decade and as it continues to evolve as a mainstream player, many institutional investors are looking to diversify their portfolio by capitalizing on its novelty and promise.
A 2020 Fidelity Investments’ research points to a trend in a positive direction by emphatically suggesting that institutional investment in cryptocurrency markets is all set to exponentially increase in the next five years, with 47% of respondents toying with foraying into digital assets to expand their investment portfolio.
Given that there is a world of difference between traditional trading and cryptocurrency trading it’s important to first get a grasp of the industry to actually be able to successfully trade in the crypto market. Without an adequate understanding of the ways in which cryptocurrency trading works, a potential investor might find wading through the crypto market a dauntingly uphill task. Add to this mix the widespread volatility of cryptocurrencies and you’ve created ground for miscalculated decisions potentially leading to huge and irretrievable losses. This is precisely why institutional traders and investors need to be well-equipped with the right kind of tools before they actually set foot in the cryptocurrency market.
Over the past decade, multiple tools have found their way to the spotlight when it comes to addressing the changing dynamic of investment and trade in the crypto market. Here are 5 critical tools that can come in handy.
1.Crypto trading platform
As an institutional investor one of the first things that should be a part of your trading arsenal is – a robust platform to carry out or execute your trades across several exchanges. Imagine having to switch between multiple exchanges with each exchange mandating you to create an account with separate credentials (and not to mention the security checks via two-factor authentication processes)? Your best bet to skip that process is to rely on a multi-exchange crypto trading platform where you can use a single unified platform to trade across multiple exchanges, all while getting a bird’s eye view of overall market performance. This can help make quicker analyses and open the door for you to fine-tune your market responses accordingly.
When it comes to trading, whether it’s stock trading or traditional fiat currency trading, institutional traders need a clear sense of direction when making trading decisions. Tools that can help in this area are visually-interactive charts and graphs that facilitate evidence-based decision making. Charts, graphs, and other visual indicators are extremely useful for traders and investors to gauge performance metrics, past trends, and upward curves to be able to decide how they want to carry out a certain trade function. While several of these indicators may necessitate a firm understanding of mathematics and statistics, the vast majority of them can just as well be visually represented on a graph.
A trading bot works as an assistant and can function almost completely independently to carry out predefined customized tasks. Given the fact that cryptocurrencies are volatile, it’s important for investors to almost always be on their feet, the use of trading bots that are computerized algorithms aimed to automate buy/sell functions with the sole goal of generating profits makes all the difference.
4.Crypto news aggregator
With cryptocurrency investments being discussed as mainstream investment assets, there’s a whole world of information about the crypto ecosystem floating around the Internet. As a crypto investor, you have to make sure you’re not missing out on any vital market information, potential crypto investors and traders need to stay up to date on all the changes and latest news in the space. Crypto news aggregators work as a one-stop source for all news in the crypto sphere.
With a portfolio manager, crypto traders can organize all of their crypto assets in one place for a comprehensive understanding of their holdings, making it easier to take stock of one’s assets and conveniently trade. Cryptocurrency prices are usually volatile or changing frequently, making it next to impossible to manually update your portfolio in real-time. This is why trading bots and advanced crypto trading tools are usually armed with a reliable portfolio management tool that can keep track of your holdings and provide appropriate guidance.
The cryptocurrency space is continuously evolving and as we see more development in this domain, more advanced tools will certainly make their entry into the market. It is highly likely to be just a matter of time before we see more trust among institutional investors in the cryptocurrency market.