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What are Assets Under Management in Crypto?

By September 7, 2022September 8th, 20223 minute read

Assets Under Management is a term you might have frequently heard in traditional finance. The total market value of an organization’s investments on behalf of clients is known as assets under management (AUM). Companies use different definitions and calculations for assets under management. Investors frequently view bigger investment inflows and AUM comparisons as a sign of quality and management expertise.

Crypto asset management is buying and selling virtual assets like crypto coins and NFTs to utilize as investments while keeping an eye on a portfolio’s overall value increase. Although, as mentioned previously, maintaining an asset portfolio—or a component of an asset portfolio—is not a new concept, it has only recently become necessary as a result of investors’ interest in crypto and other digital assets. AUM, which reflects a financial institution’s size and serves as a metric for company success, is considered by investors when selecting a financial advisor or mutual fund.

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How is AUM calculated?

An asset management company’s entire asset worth under management never stays constant. It varies based on the total amount of money invested by current investors and the number of new investors. The returns that a mutual fund generates is another factor. The assets under management are determined by companies using a variety of techniques.

Positive returns raise the fund’s total investments, which increases the number of investors and, ultimately, the volume of assets under management. The company’s volume of assets decreases when a fund generates negative returns. The fund’s value will drop if investors sell their shares, which will lead to a reduced AUM.

The Rise of Crypto Assets Under Management

The Rise of Crypto Assets Under Management is shown in the following graph.
Source: Statista

According to Statista, since the beginning of 2018, crypto funds’ assets under management (AUM) have increased globally. The cumulative AUM of crypto funds crossed the 20 billion dollar threshold for the first time in 2020 and peaked at 59.6 billion dollars at the end of the third quarter of 2021. The average AUM value of crypto hedge funds stood at roughly 58.5 million US dollars by the end of 2021, despite some of the difficulties hedge fund managers have with digital investments, such as lack of custody and regulation.

Some Crypto Asset Management Companies

1. Grayscale Investments

Grayscale Investments, founded in 2013, has grown to be one of the world’s most prominent digital currency asset managers. Grayscale’s net AUM reached $60 billion by October 2021. This crypto asset management business is registered in the U.S. and follows SEC-mandated regulatory standards. It provides a wide variety of products based on digital currencies, including the Grayscale Ethereum Trust and the Grayscale Bitcoin Cash Trust. It also has stakes in Bitcoin, Litecoin, ZCash, and Stellar, in addition to Bitcoin Cash and Ether.

2. 10T Holdings

Exclusively in the growth stage, 10T Holdings makes investments in private businesses involved in the ecosystem for digital assets. We adopt a global perspective and support the blue-chip businesses that will influence the future. The companies they have invested in include Kraken, Ledger, Figure, Deribit, Bitfury, Huobi, and eToro. According to the website, they have assets worth $1.2 Billion under their wing. 

3. BitWise Asset Management

Bitwise is one of the biggest and fastest-growing cryptocurrency asset managers, and it is based in San Francisco. At the end of 2021, Bitwise has over $1.3 billion under management across a growing range of investment options. The company is renowned for managing the biggest cryptocurrency index fund in the world and developing solutions for Bitcoin, Ethereum, DeFi, and equities indexes specifically geared toward cryptocurrencies. In addition, Bitwise collaborates with investing experts and financial consultants to offer top-notch instruction and analysis.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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