How to Get Yield on Your Digital Assets
Learn how to get yield from your digital assets to drive additional growth in your portfolio.
Cryptocurrency has been hitting the financial industry like a storm for the last decade. It was slow at the start, but now the popularity and value of cryptos, like Bitcoin (BTC) and Ethereum (ETH), are skyrocketing. Even with the most recent pull back in the markets, these assets are still up well over 100% on the year. They've even gotten the attention of mainstream investors. Investing in cryptocurrency is a bit of a hassle for the average person, but the gains can be substantial, if not volatile. Holding cryptocurrency is like riding a rollercoaster: you need to be prepared for the dips, but there are amazing heights.
Yield Paying Digital Assets
The biggest contender in the cryptocurrency marketplace is BTC; but in general it's not a yield paying asset. Through proper digital asset management, you can diversify your digital assets to get additional returns out of your portfolio from yield paying cryptocurrencies. ETH is the leader of the so-called alt-coin universe, being the second largest crypto next to BTC, and offers yield payments through certain exchanges. However it’s generally smaller cryptocurrencies that have the most yield payment options.
Many smaller cryptocurrencies, while still having a lot of money invested in them, are actually designed more for investors, thus their yield payment options are more favorable to holding the assets long term. These cryptocurrencies are basically projects that help themselves grow by paying out rewards to their holders, similar to dividends in other financial investments, like stocks.
Discovering Yield Paying Digital Assets with Digital Asset Management
Finding all the cryptocurrencies that pay out yields for holding them can sometimes be difficult through standard exchanges. The use of specialized cryptocurrency investment software makes it easier to identify these types of assets. Platforms such as HeightZero are actually designed specifically for financial investors to simplify this process. HeightZero is a turn-key digital asset management platform for financial advisors and investment funds interested in gaining access to cryptocurrencies for their clients. Using digital asset management software can help narrow down which cryptocurrencies to focus on, and allow advisor to discover which ones present the best yield opportunity.
Due to the volatile nature of cryptocurrencies, you’ll want to do a lot research into what each cryptocurrency is actually used for, how the yield is generated (liquidity providing [LP], borrowing, staking, etc.) and how is the protocol governed. Additional gains from yield payments can be great over time; however if the value of the cryptocurrency drops too much, it may wipe out those extra earnings. This is where having an advisor on your side can help you maximize yields on your digital assets while minimizing risks. Cryptocurrency specialized advisors have been watching the market for years, and they are able to better determine when it's best to buy in, and when it's time to convert to another crypto for better yields.
For Advisors By Advisors
If you are a financial advisor or asset manager looking to diversify your clients' holdings through exposure to cryptocurrencies, check out HeightZero. HeightZero is a complete solution created for advisors, by advisors to provide better access, better pricing, better security, and better integrations for all your digital asset management needs.
Please note, this article is intended for informational purposes only and should not be considered investment, tax or legal advice. Consult your investment, tax and legal teams for definitive guidance on any digital asset.