Learning your way around the crypto market can be tough. You have to spend countless hours studying the jargon, understanding how each cryptocurrency works, and evaluating how its price may potentially evolve in the future. But what if I told you that you could save precious time by using tried and tested crypto robo-advisors?
As a beginner investor, you don’t have to go on your crypto journey alone. A crypto robo advisor is a platform that automates cryptocurrency investments, making it easier for you to navigate the complex and volatile crypto market. In today’s article, we’ll explore 5 crypto robo-advisors in 2023.
The crypto robo-advisors mentioned in this article include:
A crypto robo-advisor is a platform that provides automated cryptocurrency investment management services. These platforms use algorithms to create, manage, and optimize a diversified cryptocurrency portfolio based on your risk tolerance, investment goals, and other personal preferences.
By using a robo-advisor, your role in managing a crypto portfolio is minimized. Instead, the robo-advisor utilizes complex algorithms to make decisions about when to buy, sell, or hold different cryptocurrencies. These automated platforms can analyze a vast amount of data far more quickly and accurately than the average investor could.
The main benefit of crypto robo-advisors is that they make investing in cryptocurrencies easy and readily available for investors of all skill levels. A complete beginner who knows nothing about crypto could start today simply by completing a quiz that assesses the investor and then creates a diversified portfolio tailored specifically for his wants and needs
Keep in mind that crypto robo-advisors are far different than crypto trading bots. While trading bots engage in day-to-day trades that rely on charts and indicators, robo-advisors focus on long-term portfolio growth determined by risk tolerance and investment goals.
5 Crypto Robo-Advisors to Use in 2023
The following list contains 5 crypto robo-advisors you should try out in 2023. When searching for a crypto robo-advisor, ensure that their features align with your wants and needs. Moreover, consider looking into factors such as management fees, minimum deposits, deposit options, etc.
Also note that some of the platforms listed below may focus on areas outside of crypto markets, such as stocks, while others are fully engrossed in cryptocurrencies.
Shrimpy Advisory is the newest entrant to the crypto robo-advisory space. The SEC-registered platform allows you to get started with cryptocurrency investing quickly and easily without any prior knowledge of the industry. You can invest in a selection of pre-built diversified crypto portfolios or even create your own custom portfolio.
Shrimpy Advisory offers automated crypto investing for investors of all skill levels. To get started, all you have to do is answer a few questions, and the platform will assess your risk tolerance and investment timeline to create a specially curated portfolio of cryptocurrencies that are aligned with your investment goals.
The robo-advisor enforces no minimum account balance. You can deposit as much or as little as you want. Shrimpy Advisory lets you invest in different parts of the crypto industry through carefully tailored portfolios called baskets.
Shrimpy Advisory’s list of baskets includes diversified portfolios such as:
Bitcoin and Ethereum basket: A portfolio with an equal allocation of Bitcoin and Ethereum.
Utility basket: A portfolio with cryptocurrencies such as Chainlink, Curve, Filecoin, and Maker that represent the market’s main infrastructure.
Blue Chip basket: A portfolio containing established projects with large market cap cryptocurrencies that do not fall into any specific sector but provide broad exposure to the overall market.
DeFi basket: A portfolio containing cryptocurrencies focused on the decentralized finance sector. These cryptocurrencies bring complex financial applications without the use of intermediaries to users in a permissionless manner.
Layer 1 basket: A portfolio of Layer 1 cryptocurrencies operating on their own blockchains powered by smart contracts. This basket offers investors exposure to Ethereum alternatives.
Web3 basket: A portfolio focusing on cryptocurrencies centered around the idea of a metaverse and next-generation web powered by blockchain technology.
The platform charges an annual management fee of 1.2% of your total assets. Other fees include network fees when depositing or withdrawing cryptocurrencies on-chain.
Betterment is one of the pioneers in the robo-advising space, known for its wide range of investment management services created for TradFi users. The platform recently decided to open its services to the cryptocurrency market as well, granting users exposure to the volatile world of cryptocurrencies.
Betterment uses a questionnaire to determine the user's financial goals, risk tolerance, and time horizon. Based on the responses, it creates a personalized portfolio composed mainly of low-cost exchange-traded funds (ETFs) that span different cryptocurrency classes, thereby providing significant diversification.
For crypto investing, Betterment grants you access to diversified crypto portfolios that invest in curated selections of cryptocurrencies, such as Bitcoin and Ethereum. Although Betterment offers a personalized crypto experience, you can also pick from some of their default portfolios targeting different sectors:
Universe – A portfolio featuring a diversified collection of notable cryptocurrencies that grant investors exposure to the most prominent projects in the crypto landscape, ranging from DeFi and L2s to Metaverses and more.
Sustainable – A portfolio targeting cryptocurrencies with sustainable energy consumption and minimized carbon footprint. These cryptocurrencies either utilize existing technologies consuming less energy or are on a clear path to sustainable energy usage.
Metaverse – A portfolio entailing cryptocurrencies that establish immersive virtual experiences in the metaverse. These cryptocurrencies work with technologies such as NFTs to create vibrant digital worlds with economic models, commerce, collectibles, and gamified interactions.
Decentralized Finance – A portfolio focused on the DeFi market in which projects grant users access to complex financial applications without the need for banks. This sector uses blockchain technology to decentralize lending, trading, borrowing, and other transactions.
The platform features two pricing models:
Betterment Digital: 0.25% annual management fee with no account minimum
Betterment Premium: 0.40% annual management fee with a $100,000 minimum balance
As the name implies, CryptoSimple stands out in the crypto robo-advisor sector with its user-friendly approach to cryptocurrency investment. Designed with simplicity in mind, CryptoSimple is tailored for those who are new to the crypto market. However, it also provides advanced features for seasoned investors.
The EU-based platform offers the same onboarding process as any other robo-advisor. You sign up, set up your investment profile by answering questions about risk tolerance, investment goals, and your knowledge of crypto markets. CryptoSimple uses your answers to create a diversified crypto portfolio made just for you.
The platform is built with a clean, intuitive interface that makes navigating your investments a breeze. It does an excellent job demystifying cryptocurrency, offering educational content that covers everything from basic crypto concepts to advanced investment strategies.
CryptoSimple supports a wide range of cryptocurrencies, providing access to both established coins like Bitcoin and Ethereum, and emerging altcoins. Its algorithm keeps track of the rapidly changing crypto market and automatically rebalances your portfolio as needed to maintain optimal performance.
Licensed by Europe’s leading financial regulator, the AMF, CryptoSimple is also recognized for its robust security measures. With advanced encryption technology and cold storage for cryptocurrencies, CryptoSimple ensures the protection and privacy of its users' investments.
CryptoSimple offers a competitive fee structure features through three tiers:
Onyx: 0.15% monthly management fee for accounts with balances from €0 to €10,000.
Gold: 0.13% monthly management fee for accounts with balances over €10,000
Emerald: 0.11% monthly management fees for accounts with balances over €100,000
Although Wealthfront does not offer direct exposure to cryptocurrencies, the platform has long been recognized as a leader in the robo-advisor industry. Unlike other platforms mentioned in this list, Wealthfront only offers exposure to Grayscale’s crypto trust funds, such as Bitcoin (GBTC) and Ethereum (ETHE).
Wealthfront does not offer any cryptocurrency investing opportunities aside from the two funds listed above. Even though they’re statutory trusts, both GBTC and ETHE work similarly to the platform's other ETF offerings.
Some limitations also include the fact that your overall portfolio can only carry a maximum 10% allocation to cryptocurrencies. Moreover, the trusts are not eligible for tax-loss harvesting.
Wealthfront might be for you if you’re a TradFi investor looking for minimal exposure to the crypto market for the first time. Doing so would allow you to allocate capital to Bitcoin and Ethereum while using a majority of your capital to buy stocks with zero commissions or automate your investing through portfolio rebalancing.
Wealthfront also offers high-yield cash accounts where customers can earn an APY of up to 4.55% on their short-term savings.
Wealthfront is also known for its Path tool, an interactive financial planning experience that lets users model different financial scenarios and understand the potential impact on their financial future. Whether you're saving for a home, planning for college tuition, or thinking about retirement, the Path tool can provide valuable insights.
Wealthfront has a global pricing tier where all customers pay 0.25% annually with no additional commissions or trading fees. Unlike other platforms, Wealthfront does not offer premium pricing tiers for accounts with higher balances. Also, keep in mind that Wealthfront requires a minimum investment of $500.
5. M1 Finance
M1 Finance is a platform owing most of its popularity thanks to its unique hybrid model that combines automated investing with the flexibility of a traditional brokerage. Aside from stocks, the platform also offers several cryptocurrency investment options revolving around diversified portfolios called ‘Pies.’
When users sign up for M1 Finance, they can create their own portfolio or choose from over 80 expert-crafted portfolios tailored for various risk levels, time horizons, and investment goals. These portfolios consist of 'Pies', a unique feature of M1 Finance that visually represents your portfolio and its constituent investments.
What sets M1 Finance apart is its flexibility. While the platform automates investment balancing and rebalancing, it also gives users the freedom to select individual stocks and ETFs to add to their 'Pies'. This dual approach offers a balance of expert guidance and personal control over investments.
M1 Finance also offers crypto Pies, which you can create on your own or pick from a select list of expert crypto Pies that focus on unique sectors such as Web3, DeFi, and large market-cap cryptocurrencies. M1 Finance lets you set a custom target allocation for each pie in your account and turn on automated trading so that your Pies are in check.
Moreover, every time you make a deposit, the platform will automatically invest your capital in your Pies’ holdings so that they become closer to their initial allocation targets. You can also schedule manual rebalances if needed.
For maximum security, M1 Finance has partnered with custodial wallet provider Apex Crypto.
M1 Finance stands out in this list because it’s completely free to use. And if you want to unlock advanced features, you’re free to subscribe to M1 Plus for additional benefits for only $10 a month. However, keep in mind that a majority of the premium features are only useful for TradFi investors.
How Do Crypto Robo-Advisors Work?
Crypto robo-advisors generally work by inspecting your skill level, risk tolerance, and investment goals in order to create a customized portfolio specifically tailored for you.
The process starts with you filling out a questionnaire used to create a personalized investor profile which the robo-advisor needs to create your portfolio. The platform will create a portfolio designed to maximize your returns while ensuring that it stays within the bounds of your personal risk tolerance.
The custom portfolio then goes through a process of active portfolio management. Certain crypto robo-advisors that are popular in 2023 will constantly monitor the market and adjust your portfolio as needed to ensure it meets your investment goals. This is done through a process called rebalancing, in which the platform buys and sells cryptocurrencies so that your portfolio’s allocations return to their initial targets for diversification purposes.
The last step of the process is that the robo-advisor creates a report which describes your performance, letting you know how far you have progressed. Some platforms have live dashboards that report on your portfolio’s value, rebalancing activity, and allocations.
The Bottom Line: Should You Use a Crypto Robo Advisor?
Deciding whether to use a crypto robo-advisor depends largely on your investment goals, risk tolerance, time availability, and interest in actively managing your cryptocurrency investments.
Crypto robo-advisors can be a beneficial tool If you're interested in cryptocurrencies but are unsure about diving in due to the complexity and volatility of the market. Here are 3 reasons why you might consider using a crypto robo-advisor:
Simplicity: Crypto robo-advisors make investing in cryptocurrencies simple and accessible. They handle the hard work of portfolio management, freeing you from the need to constantly monitor market fluctuations or adjust your portfolio.
Diversification: Most robo-advisors aim to reduce risk by spreading investments across a wide range of cryptocurrencies. This diversification can help reduce potential losses and balance your portfolio's performance.
Automated Portfolio Management: One of the main advantages of crypto robo-advisors is their use of algorithms to automatically manage your portfolio. They take care of buying, selling, and rebalancing your investments based on your risk profile and investment goals.
Shrimpy is providing an endorsement of Shrimpy Advisory. Shrimpy and Shrimpy Advisory are affiliated companies. A conflict of interest exists because Shrimpy Advisory will be compensated if a client utilizes Shrimpy Advisory’s services. Registration as an investment adviser does not imply a particular level of skill or training
Investments in cryptocurrencies are: Not FDIC or SIPC Insured • Not Bank Guaranteed • May Lose Value. Cryptocurrencies are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns.
About The Author:
Marko is a crypto enthusiast who has been involved in the blockchain industry since 2018. When not charting, tweeting on CT, or researching Solana NFTs, he likes to read about psychology, InfoSec, and geopolitics.