I'm working on a robo-advisor that would help people automate their portfolio for cryptocurrency investments. You can think of it like Betterment for Crypto.
The target audience would not be "hard core" crypto traders. But rather, folks who are interested in crypto because they want to diversify their overall investments assets but want a more passive approach because they don't have the time or energy to do the legwork. (So maybe you wouldn't be a user but maybe have a coworker/aunt/friend who would be).
Here are the features/benefits of a robo-advisor that I'm hoping to get some feedback about:
- Automated Rebalancing. The benefit here is to make sure the portfolio is never overexposed to one coin and collect some gains along the way. For example, maybe someone always wants 50% of the asset allocation to be in Bitcoin. So the robo-advisor can rebalance when that percent allocation varies. Or maybe someone only wants 2% of their total net worth to be in cryptocurrency. The robo-advisor could liquidate the excess amount above a certain threshold.
- Diversification. Just like with stocks, diversifying crypto spreads out the bets. You could argue Bitcoin and Ethereum are the main game in town. But in light of recent events, there's a strong argument for diversification (i.e. the astronomical gas prices on Ethereum driving mind & marketshare towards Binance coin and others).
- Vetted Cryptocurrencies. I guess this part of the robo-advisor would involve a human. So maybe I should call this a "cyborg-advisor". But the idea here is to spare people from researching each coin, which as many of you know can get really complex & time-consuming. You might think, "well, why not just go by market cap weighted index?" But looking at the top coins by market cap, at least one is questionable due to regulatory issues (XRP/Ripple) and others are has-been's at this point (like Litecoin or Bitcoin Cash).
- Earn Interest. Defi products can be part of the automated portfolio, similar to bond allocations in retirement funds (although much riskier of course). IMO defi is crazy difficult for a casual retail investor to take part in. Blockfi is probably the closest thing to hiding the complexities of lending crypto for rewards, but you don't get the collateral safety valves built into defi.
- Automated Tax Loss Harvesting. Just as you can sell stocks at a loss to offset capital gains, the robo-advisor would do something similar but with crypto.
Questions for the sub:
- Would you (or someone you're close to) use a crypto robo-advisor? If not, please explain.
- What do you think of the features mentioned above? What other features would you like to see?
- How much would you be willing to pay? 1%? 0.5%? 0.25% assets under management?
- Any other feedback?
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