Bitcoin has lost 30 percent in value since early March, following the corona-crash in equity markets. Yet, INVAO’s Blockchain Asset portfolio is still generating positive returns. How the Liechtenstein-based Blockchain Asset Manager navigates the crisis.
2020 has so far not been a good year for most investors. The economic effects on the coronavirus have led to a market panic bringing down stock markets around the world – even the historic crisis hedge gold has lost in value.
Crypto markets have been affected by the global downturn as well, losing five percent of market capitalization in Q1 2020. Bitcoin is down almost 30% since the end of February and about 10 percent in the first quarter.
But despite enormous losses, there are still some who manage the turbulent market environment. Liechtenstein-based Blockchain Investment Firm INVAO has posted a positive return of 1.6% for its flagship product, the IVO – Blockchain Diversified Bond, since early March. What are they doing differently?
Active Risk Management and Portfolio Diversification
INVAO’s IVO Bond is a Security Token that is based on an underlying Blockchain Asset Portfolio which is actively managed by the company through AI-based trading systems.
“Our investment strategy has a strong focus on risk management,” says INVAO’s CEO Frank Wagner. “We have come up with a system of reliable risk indicators and designed our bond for maximum flexibility. In case there is excessive market risk, we can quickly exit the blockchain market and temporarily secure our assets in cash or stablecoin positions.”
Despite Bitcoin losing about 10% in Q1 2020, crypto markets have also provided investors with opportunities. Dash (DASH), for example, gained 63 percent since the beginning of the year.
“Investors need to understand that blockchain is way bigger than just Bitcoin,” says Wagner. “And there are many Altcoins that show low correlations with Bitcoin. That’s why we invest in a diversified portfolio of Blockchain Assets like you would do with every other asset class.”
According to Wagner, broad diversification was one reason why INVAO’s portfolio has fared well in March. “If you only invest in Bitcoin, you face huge concentration risks. A diversified portfolio is a much better approach for risk-averse crypto investors,” adds Wagner.
Liechtenstein offers maximum legal certainty to blockchain investors
INVAO launched its Security Token Offering last year and Liechtenstein’s authorities accepted the token’s prospectus. The company also has operations in Germany and Dubai and wants to become a globally leading Blockchain Asset Manager.
“We decided to issue our bond in Liechtenstein because of the progressive government and legal framework,” explains Wagner. “With the introduction of the Blockchain Act, Liechtenstein was the first jurisdiction to create legal certainty for blockchain businesses and investors.”
He believes Blockchain Assets will become more popular as an investment vehicle during the crisis. “Once the panic is over, investors will start looking for risk assets again,” says Wagner. “Considering how unpredictable equity markets are now, and with interest rates at almost zero, Blockchain Assets are becoming increasingly attractive.”