Crypto Robo-Advisors | Digital Currency Investing

bitcoin advisor

Cryptocurrency: the money of the future, or a fad sure to bankrupt its many investors?

Cryptocurrency investing is hot. But navigating the asset, without a cryptocurrency advisor, is a challenge. In light of the crypto investing fanfare, investors are clamoring for help navigating this emerging digital asset class. Crypto robo advisors are slowly entering the market with SEC-registered crypto robo-advisor Makara now available. But, the demand for other cryptocurrency robo advisors continues to grow.

Wealthfront is the first legacy robo-advisor that offers clients Greyscale bitcoin and ethereum funds within their managed portfolios.

Bitcoin, the most well-known cryptocurrency, seems to be the latest great investment opportunity, coming in at a value between $29,000 and of $63,500.00 USD to every one bitcoin during 2021, so far. So, it’s about time for easier access to a bitcoin robo-advisor.

Bitcoin Price Chart – January 1 to September 13, 2021

Just a quick glance at this one-year bitcoin chart shows the stratospheric growth and decline of this digital asset.

(Please realize that this chart will be out of date very quickly, due to the rapid price movements in the cryptocurrency world!)

Just like any investment, you might want to consider a cryptocurrency advisor, robo-advisor, or fund for your cryptocurrency.

Within one year Bitcoin has grown from $10,000 per coin to over $50,000 per coin. And it makes sense that a robo-advisor would make investing in cryptocurrency so much easier.

Today, you can buy bitcoin or other cryptocurrency from a variety of sources. Even the Robinhood trading app offers cryptocurrency investing.

But it would be so much easier to buy a cryptocurrency fund or robo-advisor.

And so, you might be wondering: Can I use a digital advisor to manage my cryptocurrency money? Does a bitcoin robo-advisor exist?

What Is Cryptocurrency?

If you think about it, most of our money is just a series of numbers moving between accounts. We don’t (usually!) pay for a house in physical cash, instead choosing to move our money around through a series of agreements and electronic payments.

Cryptocurrency, like bitcoin, functions in a similar way, except that bitcoin isn’t represented by a physical currency; it is completely electronic.

Now, the way cryptocurrency works is extremely technical. Basically, each bitcoin is specially coded so that it has an individual identifier. Bitcoins and other digital currencies are kept in electronic “wallets” that are unique to the individual who owns the wallet. The codes make these bitcoins easy to trace when they are used for payment or in transfer from one wallet to another.

Bitcoin can be used to make purchases online or to make payments between individuals, so it is a legitimate currency. All currency values fluctuate to some extent, yet bitcoin does so very rapidly. Because of the rapid price changes, cryptocurrency must be considered a speculative investment.

Just like other financial products, cryptocurrency can be managed. A cryptocurrency robo-advisor could make investing in bitcoin, ethereum, altcoin, and other digital assets, so much easier.

Why Should I Invest in Bitcoin?

Bitcoin came into being in 2009. The primary benefit of this cryptocurrency is to circumvent the need for a traditional bank. Bitcoin is unregulated and largely untraceable—it functions as a purely peer-to-peer payment system without the need for governmental or bank intervention.

And blockchain is the technology that facilitates cryptocurrency transactions.

The lack of big business intervention is certainly appealing, although steps have been taken since its creation to ensure that bitcoin is taxed as an asset.

Cryptocurrency such as bitcoin can be an attractive investment. While some investors are skeptical over the long-term promise of bitcoin. After all, the cryptocurrency price is extremely volatile. With such high prices for initial investments, those looking to get rich through bitcoin should be cautious.

The bitcoin proponents state that due to limited supply of 21 million bitcoins, greater demand for the earliest cryptocurrency will drive prices higher and higher. Unless, the current supply limit is lifted.

Free; Robo-Advisor Comparison Chart

Although the currency has seen value fluctuations, many investment professionals see cryptocurrency as a currency of the future and predict substantial growth over the next few years.

Is There a Robo-Advisor for Cryptocurrency?

Yes. and with the launch Makara, the cryptocurrency robo-advisor options have just improved. Although robo-advisors have been exploding in popularity for traditional investment options, cryptocurrency is still relatively new, as is the market for bitcoin robo-advisors. Still, a few companies have risen to the need.

Currently, there are roughly five crypto robo-advisors on the market; four are designed for consumers to use on their own, while one is structured to help traditional financial advisors assist their clients with cryptocurrency investments. Titan Invest robo-advisor promises to offer cryptocurrency very soon. And, Wealthfront is now offering crypto access.

Cryptocurrency Robo-Advisors

1. Wealthfront | Bitcoin and Ethereum

Wealthfront recently pivoted from a pure robo-advisor to one that also offers the ability to customize your portfolio. In addition to automated pre-made digital portfolios, Wealthfront Crypto enables users to invest directly in the best cryptocurrency funds available today in the US.

Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE) are available to all Wealthfront customers.

Wealthfront is the only diversified US robo-advisor with access to cryptocurrency funds. To invest in GBTC or ETHE at Wealthfront, first open an account. After answering a series of questions, you can select “edit portfolio” on the investment account dashboard and follow the prompts to “add investment”.

Wealthfront crypto robo-advisor features include:

  • Rebalancing-to keep investments in line with your preferred risk tolerance score.
  • Tax minimization-in taxable accounts trades strive to reduce the tax impact.

Wealthfront also offers cash management, smart beta, individual stocks, ETFs and risk parity investing.

Read the Wealthfront Review

2. Titan Invest

Titan Invest, the robo-advisor known for hedge-fund like investing recently launched an actively managed crypto fund. Unlike the Greyscale Funds, available through either Wealthfront of their own site, for accredited investors, the Titan Invest Crypto offer invests in five to 10 coins. The crypto choices are selected based upon fundamental research and expected to outperform their peers during the upcoming three to five years. The fund balances risk and returns and is rebalanced to maintain a reasonable risk and reward balance.

The investment minimum is $100. For accounts valued at less than $10,000 the fee is $5 per month. Accounts worth more than $10,000 are charged 1.0% AUM.

Read the Titan Invest Review

3. Makara | SEC Registered Crypto Robo-Advisor

Launched in June 2021, Makara uses algorithms to create and manage cryptocurrency investment portfolios that align with investors goals. Makara enables users to invest in baskets of coins such as:

  • Decentralized Finance (DeFi) Basket: Equal-weight allocations to various cryptocurrencies.
  • Inflation Hedge Basket: Equal-weight allocations to historical and future state cigital assets expected to hedge against inflation including tokenized gold and Bitcoin.
  • Universe: Risk-weighted exposure to the entire investable universe of assets found on Makara.
  • Blue Chip Basket: Weighted basket of the largest cryptocurrencies. Designed to minimize volatility.
  • Bitcoin Basket: Single asset basket for investors who want to invest in Bitcoin.
  • Ethereum Basket: Single asset basket for investors who want access to Ethereum, the second largest crypto asset.

Makara also offers a library of educational resources to learn about cryptocurrencies.

Visit the Makara Website and sign up for the waitlist. The crypto robo is currently onboarding new customers.

4. M1 Finance | Back Door Robo-Advisor for Cryptocurrency

The free robo-advisor, M1 Finance allows you to select your own investments from thousands of stocks and funds. First, you choose your desired investment holdings, and invest your desired amount of money in each stock or fund. Then, M1 handles the future management and rebalancing of your entire portfolio – in the same way that a typical robo-advisor works.

To turn your M1 Finance account into a cryptocurrency robo-advisor, simply populate a portfolio (or pie) with crypto and blockchain ETFs and let the company rebalance back to your preferred asset allocation!

Voila! Cryptocurrency advisor!

Cryptocurrency and Block Chain ETFs

There are several newer cryptocurrency-related ETFs (exchange traded funds) that recently launched including Amplify Transformational Data Sharing ETF (BLOK),  Reality Shares Nasdaq NexGen Economy ETF (BLCN), First Trust Index, and Innovative Transaction & Process ETF (NASDAQ:LEGR).

These investments are considered “blockchain funds” and so aren’t pure crypto-asset funds.

Read the M1 Finance Robo-Advisor Review

5. Wealth Square | Cryptocurrency Advisor

Headquartered in Paris, France, Wealth Square robo-advisor is available to US investors, Wealth Square. This platform offers free financial tools, zero commissions, and a free crypto advisor.

The automated investing portal claims that it is better than a crypto exchange and better than a financial advisor.

The Wealth Square Cryptocurrency robo-advisor offers a variety of features.

The complete financial portfolio management dashboard includes crypto assets, wallets, bank, and investment accounts. You can also input real estate and collectibles.

You can build your own diversified cryptocurrency portfolio or choose from the expert portfolios. These are created by trading professionals who assess performance and risk of the specific coins.

Like a traditional robo-advisor, Wealth Square will rebalance your portfolio back to your preferred asset allocation. This involves selling assets that have overperformed and buying those that have lagged, thereby keeping your preferred mix.

Wealth Square offers back testing to view how a specific portfolio would have performed in the past.

Like many online financial tools, the platform offers a secure portal to plan for future goals and create a path to realize these aspirations. The service also offers a high yield savings account.

Visit the Wealth Square website.

6. Empirica | Bitcoin Robo-Advisor for Financial Professionals

Even if you like the idea of sticking with a traditional financial advisor, you can still reap the benefits of a robo-advisor’s algorithms.

Empirica Crypto Advisor is a bitcoin robo-advisor platform designed to supplement a traditional financial advisor’s capabilities. The platform allows financial advisors to create thoughtful profiles for customers based on risk tolerance and financial goals, just like any other robo-advisor.

Empirica also offers fully automated algorithmic trades. This helps traditional financial advisors to offer timely trades and portfolio rebalancing based on live-time market fluctuations.

Of course, in order to benefit from this bitcoin robo-advisor and financial professional hybrid, your financial advisor will need to adopt the software.

Crypto Robo-Advisor Alternatives

Invest in Cryptocurrency and Bitcoin on Your Own

There are other ways to invest in cryptocurrency on your own.

Pure Cryptocurrency Funds

At present, these are the only pure cryptocurrency funds available, although it’s only a matter of time before competitors join the fray.

You’ll need to invest in these funds through an investment broker who offers access to over-the-counter markets. This includes all the major brokerage firms.

Bitwise 10 Crypto Index Fund

A new index cryptocurrency fund recently launched called the Bitwise 10 Crypto Index Fund (BITW). The fund offers diversified exposure to a group of digital assets including Bitcoin, Ethereum and others. The fund tracks the Bitwise market-cap-weighted index of the 10 largest crypto assets, which are screened for liquidity, custody, and other risks. The fund is rebalanced monthly, according to Bitwise. 

So, if you want a cryptocurrency robo-advisor, you might consider investing a few dollars in this fund. Just be aware that the management fee has an expense ratio of 2.5%, which is higher than most stock and bond funds.

The fund trades on the OTCQX U.S. which is and over the counter market. It is the highest quality over-the-counter trading market.

Grayscale Cryptocurrency Funds

For affluent crypto investors, Grayscale is a company devoted to creating ways for investors to participate in the cryptocurrency opportunities.

Bitcoin Trust (OTC:GBTC) is available to accredited investors, or those who meet certain income, net worth, or investment knowledge criteria. This fund invests in bitcoin and can be bought and sold through an investment brokerage account.

Grayscale also offers six other funds that invest in other digital currencies. It’s important to note that the fund might be trading at a premium to net asset value, or a discount.

You could add one or more of these funds to your M1 Finance investment portfolio and then the platform would manage and rebalance them, along with your other holdings. That’s how you would create your  own cryptocurrency or bitcoin robo-advisor

Cryptocurrency Direct Investing

There are a wealth of apps and ways to trade crypto on your own. It involves wallets and keys and keeping track of your digital assets! Proceed with caution.

Before diving into the volatile cryptocurrency market, decide if investments in cryptocurrency are in line with your risk tolerance. If you like the thrill of a high-risk, possibly high-reward investment, choosing the right bitcoin management option is essential.

Bitcoin and other crypto asset values fluctuate frequently, and a cryptocurrency fund or bitcoin robo-advisor might be a great investment management strategy for those who want to cash in on the growing popularity of cryptocurrency.

Here are a few sites for crypto investing:

Check out Wealthfront, the only diversified robo-advisor that offers crypto portfolios.

Best Crypto Robo-Advisor | Wrap up

Although the options for bitcoin robo-advisors are currently slim, the growing need for asset management in the cryptocurrency realm nearly assures that more robo-advisors will emerge in the future. The demand is great, despite the fact that cryptocurrencies have yet to be considered a legitimate asset class.

Canada recently launched several cryptocurrency ETFs including the Purpose ETF offers. US companies like VanEck, are still fighting with regulators to launch their own cryptocurrency ETFs. Other financial firms are launching blockchain-related ETFs to capture the massive demand for digital currency.

Be advised, that although there’s an abundance of cryptocurrency hype, bitcoin and the other digital currencies are new and speculative investments. Don’t invest in this technology without realizing that cryptocurrency values are volatile. That means that investments in cryptocurrency have massive swings in value, are unregulated, and unproven investments.

Be aware that crypto investing involves substantial risk, so it’s best to allocate some of your other investment allocation to lower risk exchange traded funds in the traditional stock and bond markets.

Our rule of thumb for speculative investments is to limit the percentage of your risky assets to 5% of your total investment portfolio.

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*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe in.

Disclosure: Barbara Friedberg, site owner has shares in Coinbase (COIN).

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