Why Cryptocurrencies Should Be Part of Your Company’s Portfolio Diversification
by Fintech News Singapore November 23, 2021Cryptocurrencies are gaining traction, mainly amongst institutional clients who find themselves embracing a new and rising asset class. Sparrow, a home-grown digital asset specialist, sheds some light on the trends unfurling in the digital assets space.
Alvaro Patron
“We observe growing interest among financial institutions and family offices in a new developing asset class that not only yields but also grows, creates value, and acts as an alternative way to store value,”
said Alvaro Patron, Head of Sales at Sparrow.
Whilst individual clients tend to gravitate towards a “buy low and sell high” mentality with a bias towards a shorter-term financial gain, the firm noticed that long-term wealth creation opportunities have piqued the attention of institutions.
Businesses are now highly focused on regulations, quality of assets, and how the products are structured to ensure transparency in their dealings, holdings, and accounts.
“Sparrow aims to raise the confidence of institutional clients by offering innovative solutions to bridge traditional finance with digital asset solutions,” added Patron.
A need to address common misconceptions
Contrary to popular belief, there’s more to cryptocurrency trading than a “buy and hold” strategy.
There are a wide range of tools that allow clients to tailor a strategy based on their specific risk appetites.
These tools banish the misconception that clients cannot control the infamous volatility of cryptocurrencies.
Most importantly, clients should not begin their cryptocurrency journey based purely on speculation and the fear of missing out (popularly called FOMO).
Instead, they should partner with an established digital asset partner, like Sparrow, who can develop holistic strategies based on their risk appetite and long-term goals without compromising regulatory, compliance and risk management requirements.
Sparrow welcomes proactive regulations
Patron trusts that proactive regulations are integral in laying a strong foundation — paving the way for orderly growth in cryptocurrency and creating a level playing field for clients.
“We are optimistic that with a solid regulatory framework in place, digital assets will cement themselves as an up-and-coming asset class,” said Patron.
Manage volatility with bespoke digital asset solutions
An optimal portfolio growth strategy involves deploying a solid framework and tools that enable institutional clients to take positions that are aligned with their goals and risk management requirements.
Sparrow tailors digital asset solutions that enable its clients to meet their portfolio objectives, goals, and risk management requirements.
Digital asset specialists at Sparrow work closely with clients to design a clear growth journey with specific and holistic goals while addressing common issues such as risk management, compliance, and meeting financial reporting standards.
Importance of portfolio diversification
“Not putting your eggs in one basket” is a key principle when it comes to achieving a good asset allocation strategy.
Not only does it help mitigate volatile price movements across different asset classes, but it can also add new sources of income.
As such, finding a good mix of asset types that responds uniquely to a given risk appetite is what every “money manager” is looking to achieve.
Patron believes cryptocurrencies should be a part of a diversified portfolio — as it has a low correlation to traditional assets.
Furthermore, this medium of exchange that exists on blockchain can generate significant yields at a time when fixed income returns are at historical lows.
Launch of bitcoin futures exchange-traded funds deepens market
The cryptocurrency industry recently witnessed a pivotal point with the launch of the first Bitcoin futures exchange-traded fund (ETF).
Patron welcomes this momentous event and believes that this will broaden the market and entice individuals who have always been curious about trading cryptocurrencies, therefore increasing the overall demand for bespoke digital asset services.
Sparrow is the perfect partner to capitalise on the broadening of the market with innovative digital asset solutions for institutions, family offices, and wealth managers looking to wade into the world of cryptocurrencies.
Cryptocurrency adoption continues
Now more than ever, businesses across a multitude of sectors are accepting cryptocurrencies as payments. They include a variety of commerce, retail, and even universities.
“We are optimistic on the outlook of cryptocurrencies with higher utilisation of digital payments, more funds deployed into developing innovative digital payment solutions, and investments into startups in the fintech and blockchain industry. There has been no better time to begin exploring the world of cryptocurrencies,”
Patron mentioned.
Start trading digital assets with Sparrow on a safe and secure platform here.
Risk warning on digital payment token services
The Monetary Authority of Singapore (MAS) requires Sparrow Tech Private Limited (Sparrow) to provide this risk warning to you as a customer of a digital payment token (DPT) service provider. Before you pay Sparrow any money or DPT, you should be aware of the following. Sparrow is exempted by MAS from holding a licence to provide DPT services. Please note that you may not be able to recover all the money or DPTs you paid to Sparrow if Sparrow’s business fails. You should not transact in the DPT if you are not familiar with this DPT. Transacting in DPTs may not be suitable for you if you are not familiar with the technology that the DPT services provide. You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.
Disclaimer:
The information provided here is for informational purposes only and is not to be construed as a recommendation or advice to any prospective investor in relation to any legal, tax, financial investment or any other matters. You should consult with an attorney or other professional advisors to determine what may be best for your individual needs. Content contained on or made available through any of our communication channels is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of the information on any of our communication channels is at your own risk.
