Summary Highlights: Digital Asset Education Series: “Asset Allocation for Digital Assets”
Sharing key insights and perspectives from this edition of the webinar series, titled “Asset Allocation for Digital Assets.” You can revisit and replay the recording below.
For a summary of the webinar discussion, take a look at the below!
As always, please reach out to us with questions, comments, and suggestions for topics/speakers for our Digital Asset Education series!
About Michael Wu as CEO & Founder of AMBER Group:
Michael is a Dartmouth graduate, with professional experience on wall street as a trader, working for firms such as Goldman Sachs and Morgan Stanley. When asked about the origination of Amber Group, Michael noted, “We started to think about how to apply the quant side of things into financial markets and trading, and that’s how we started what is now Amber Group today. In 2014 we began idea formation, and 2017 was the official founding year and we started operations. We got into crypto during a crazy bull run in the second half of 2017. Fast forward 3 years later, and today, we consider Amber to be a leading integrated crypto services platform — we provide top tier crypto financial services to our clients 24/7.”
What are the Key Factors Driving Movements for Digital Assets?
Global Macro Conditions & Real Money vs. Hot Money
“Global macro conditions — people thought it was a brief anomaly and rates were going to come back to normal. However, that is not the case. As global central banks continue to ease, there is an urge to invest fiat currencies, and a need to diversify into alternative assets, such as bitcoin and other crypto currencies. I think a driving theme is we see more institutions, wealth management individuals, and investors, coming more into crypto bit by bit. This kind of inflow is sticky, they are long term, real money. We think of this like Real Money vs. Hot Money —Real money drives the long-term real demand. In the case of crypto they are usually limited supply, which is a dream scenario for an asset to boom. The ups and downs for this year were liquidity driven. Diversification in the traditional markets — didn’t work that day (March 12) — maybe that means people need to further diversify into a newer category of assets or digital assets, like Bitcoin. With the rise of DeFi, all the new protocols, people are coming back into the industry for deeper understanding. #DeFi was more of an experiment, and it has proven to be one that will last.
All of this makes us confident in what we are building, that we are in the very early stage of this young industry. As the global macro political situation continues, it will always be complex…the rise of China, monetary easing for the long run etc, this sets a great opportunity for us crypto entrepreneurs to be in the industry at this time.”
Diversification for Sophisticated Investors: Is this an Asset we should diversify OR is it for the SAKE of diversification? What kind of diversification do digital assets provide?
‘Whether you believe fully in crypto or not, at this point it is unreasonable to not diversify some”
“We also receive this question a LOT from our more sophisticated investors who are more curious about crypto, simple answer: Let the numbers speak for themselves. Crypto has a decade long history, if you look at the growth over time, it has provided very amazing returns over time. It has shown VERY little correlation over time to equities, and even to commodities. The number, at least historically, can tell you that it has been a good asset that provides a good return and a great diversifier for your portfolio.
Looking forward, why do we think this will last? Why, because I think we have already passed the initial phase, all the capital, infrastructure, and people in the industry, there are just enough stakeholders to confirm this is not going away, there is too much at stake. There’s also enough consensus as you can see in Bitcoin. Though the total market cap is still only a few billion dollars, which is relatively small. We agree there is a basic demand, which is continuing to grow, and fixed supply, so the asset will grow. We have proven that Bitcoin itself is a good store of wealth. Is it a good payment currency, that is still undecided. Even with Ethereum, it was small and came to play in the ICO boom, but it was an example of the ability to build an open finance system on it; borrowing, lending, trading, liquidity provisions, all done on Ethereum, in a decentralized fashion. So, it has a completely different application layer vs. Bitcoin, and has more value than just another digital currency. This just means there are so many more possibilities.
Whether you believe fully in Crypto or Not, at this point it has become unreasonable to not diversify some. As a purely rational investor, as long as there is a possibility of the upside, investment matters.”
Mainstream Crypto Currencies: Hedge Against the Macro OR just a Diversifier? Are they a Hedge Against Inflation Currently?
“Totally, over time BTC rise had a few key drivers in its early stage, some was FX driven, there was a lot of wealth from certain emerging markets to diversify into more developed markets or assets and a good medium for that was Bitcoin. My view is, the two systems, both centralized and decentralized systems will grow and run in parallel for some time, in fact I would say that is healthier for bitcoin and crypto from an investor point of view. There are enough stakeholders in the crypto industry, there are clearly way more in the traditional markets. So, in that sense it’s better for both of those to be in parallel. Best return, minimum volatility is the idea.”
Yield: Sushi…Yams…clearly there is hunger for yield! How do people start the search for yield for themselves? Should people even be trading themselves?
‘Trading is VERY hard’
“First, you should get to know Amber Group and the services we offer for our investors. Second — I come from a trading background and, honestly, trading is very hard. You can break it down into two parts:
- One is similar to investing: you pick a time, you believe in the asset you buy it, if you think it’s overvalued, you sell it or go short.
- The second is what we call speculation — whether it is fundamentally driven, or you are a chartist, or have the best information advantage or you are just faster than everyone else — speculation is VERY hard. Short term speculation is a zero-sum game; you only realize the long-term value of an asset over time.
If you understand that, and you think you can out compete everyone else, then go for it, in that sense it almost has nothing to do with the asset itself, it’s a game you want to have an edge over the other players, you could be playing mahjong.
Either way, we hope you understand your view and through trading you are expressing that view, and we can help with that at Amber. You have to understand the risk. We would rather encourage most investors who are new to the space, take your time and invest first. Buy some bitcoins, or Ethereum, or some tokens you really like. Treat it like an investment or a learning process. Buying BTC/ETH at any level over time, is not that risky. Hold them, put them in the Amber app, and treat them like an investor.”
Yield Farming: What’s the deal with Farming?
FX Traders vs. the Bond Boys
“Yield Farming can be thought of like the FX boys and the Bond boys:
- Bond Boys: Rate traders, like to earn carry, and earn fixed income
- FX Traders: Punters, go long go short bet in different directions
Yield farming should have been more of a Bond Boys game, but what’s funny is more of the investors in yield farming approach it more from an FX trader’s perspective. They care more about the token rewards they earn, and they do not care much about the APY or the risks or farming the fixed income. We have clients, after a few days of farming are over it!”
How does Amber help investors make returns?
Crypto is Complicated and Changing VERY fast: AMBER is the Gateway to Crypto Finance
“We pride ourselves as being the gateway to crypto finance. As you mentioned, crypto is still quite complicated and it’s changing very fast. For a normal investor, it’s almost too hard to catch up on these trends by themselves. What we can do is wrap up all the intricacies and complicated stuff behind crypto finance, and package it into something any user can understand and benefit from. Amber will give you the best end result to our capabilities. Whether you want to subscribe your bitcoin for 1 day or 1 year, you put it in and you see your yield. We take care of everything else. In terms of liquidity, same thing, you don’t want to have your assets on a bunch of different exchanges. We as the gateway, take care of that and bring you the best liquidity.”
Stay tuned for the NEXT edition of our Digital Asset Education Series. Learn more about Digital Assets and enhancing returns by joining our newsletter: https://vegaxholdings.com/
As always, please reach out to us with questions, comments, and suggestions for topics/speakers for our Digital Asset Education series! email@example.com
Amber Group: https://www.ambergroup.io/
Amber Group is a leading global crypto finance service provider for users worldwide. With a presence in Hong Kong, Taipei, Seoul, and Vancouver, the company has served 200+ institutional and HNW clients, and cumulatively traded over $200 billion up to date.
VegaX Holdings: https://vegaxholdings.com/
VegaX Holdings is the “BlackRock” of the Crypto Asset Industry. We provide investors globally with one-stop access to sophisticated and secure crypto asset management. The asset management industry is the largest in the world representing more than $80 trillion dollars in investments through investment products like ETFs, mutual funds and indices that outperform investments in individual stocks. VegaX is the first to create similar investment products for Crypto providing investors outperformance versus buying individual crypto currencies. On average, investors buying VegaX products make 30% more profit versus just holding Bitcoin.
Chinaccelerator is a mentorship-driven program assisting internet startups from around the world cross borders — from the world into China, and from China to the world. It is operated by the venture fund SOSV, which has $700M+ AUM and operates 5 global accelerators. Chinaccelerator offers three months of rigorous guidance, training, and resources from mentors, partners, and investors. The robust and active alumni network continues to support startups long after they complete the Chinaccelerator program.
Follow, Message, Tweet, Clap, and Join Us Here:
As we continue to expand our digital footprint, here is where you can find us:
Main Site: https://vegaxholdings.com/