Learn: Building Blocks

Cryptocurrency Investments: what to consider

Cryptocurrency has moved into the mainstream as an investment asset class. If you're looking to add some to your portfolio, you may need help figuring out how to get started. Read on to learn the basics of cryptocurrency and how to start investing in it.

What are Cryptocurrencies?

A cryptocurrency (also known as “crypto assets” or a subset of “digital assets”) is a digital currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Cryptocurrencies are based on blockchain technology - a distributed ledger enforced by a disparate network of computers.

The “big 3” cryptocurrencies cover about 75% of the total crypto market (measured by the share of total crypto market capitalisation). These are Bitcoin, Ethereum, and Stablecoins. The remaining 25% consists of over 20,000 cryptocurrencies called “altcoins”, each with its use cases and associated risks.

  • Bitcoin (BTC) is the largest cryptocurrency (40% market share in value) and the paladin of the pack. Bitcoin is commonly referred to as the “digital gold” - a decentralised store of value that utilises cryptography to secure and validate transactions.
  • Ethereum represents a blockchain that has the capability of running computer programs known as smart contracts, akin to an operating system for financial transactions.
  • Stablecoins are uniquely positioned as a cryptocurrency pegged to a stable asset such as the US Dollar. Stablecoins are closely associated with fiat currencies and are normally backed 1:1 to their associated currency.
  • An “altcoin” is a combination of the two words "alternative" and "coin." It is generally used to include all cryptocurrencies and tokens that are not Bitcoin.

How to invest in cryptocurrencies

When it comes to investment decisions, the two main drivers are linked to the high return potential offered by cryptocurrencies and associated risks. Here are some things to consider when it comes to investment approaches:

Buying your own Crypto

A simple way to start is to invest directly in cryptocurrencies. This can be done using many local exchanges online. This option is for investors who are prepared to do thorough research and can handle the risks associated with a “DIY” approach, including complexities associated with centralised exchanges, wallets, counterparty risks, hacking and human errors. As the investment extends beyond casual trading and speculation, then these risks increase.

Pet Rock Investment Funds

Pet Rock Investments offer independently managed funds aligned to regulation and provides a legal structure familiar to the financial services market and trusted by financial advisors. The funds have independent Fund Administrators - an independent company verifies client balances every month and reports back to clients. Each fund is actively managed by a dedicated and specialised Crypto and Finance team. With active management, additional returns are generated from the funds over and above the asset appreciation of the underlying cryptocurrency.

Why we chose our four Funds

There are a wide range of factors influencing a cryptocurrency’s value. We consider some factors to be essential to assess the viability of a cryptocurrency, such as adoption by users and where the monetary value lies. The United States Dollar (USD) Digital Asset fund is unique in seeking to gain yield while pegged to the USD. The tokens used in this fund include USDC and USDT which cover a significant portion of the stablecoin share of the market.

Each Fund is chosen along the risk and return continuum.

Risk vs Return

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Important information: Pet Rock SPC (the ‘Fund’) is a segregated portfolio company incorporated in terms of the laws of the Cayman Islands with company registration number SE-391893. PetRock Investments Limited (the ‘Manager’) is authorised and regulated by the Financial Services Commission (BVI) with registration number IBR/AIM/22/0748 .
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