Investing in cryptocurrency requires expertise, vast technical knowledge, and lots of time. These requirements are extremely high for the average person, who has likely never stepped into the crypto market. However, the rise of crypto robo-advisors is making the volatile and exciting new asset class more accessible than ever.

A crypto robo-advisor is an online investment platform that automatically invests in cryptocurrencies on your behalf. These platforms create a custom crypto portfolio specifically designed for your needs based on your financial goals and risk tolerance.

In today’s article, you’ll find out how crypto robo-advisors work, discover their benefits and disadvantages, and learn why they might be useful to you.

What Is a Crypto Robo-Advisor?

A crypto robo-advisor is a platform that automates your crypto investments, allocating capital to various cryptocurrencies based on your risk tolerance and financial goals, and periodically rebalances your portfolio to offset changing market conditions.

Robo-advisors are created for investors of all skill levels. You can use one even if you’re a complete beginner. This is because your role in investing is minimal due to the automated nature of robo-advisors. All you have to do is complete a simple questionnaire that determines your investor profile – which strives to maximize automation while minimizing manual intervention – and the robo-advisor will do the rest.

The portfolios that crypto robo-advisors create are different for each user. Some portfolios target riskier cryptocurrencies, while others focus on cryptocurrencies with a relatively low risk level.

For example, some people are more adventurous and seek high returns in spite of elevated risk. Their investor profile might guide the platform to provide them with a diversified portfolio that invests in sectors such as Metaverse, Web3, or NFTs — which have a higher potential return and risk relative to Bitcoin, Ethereum, and other leading cryptocurrencies.

Some might want to take it slow, and the crypto robo-advisor will determine that they might need a portfolio containing only established cryptocurrencies with lower levels of volatility.

The options at your disposal are limitless. Robo-advisors create unique portfolios for each investor, turning the daunting crypto environment into a market in which anyone can invest.

How Does a Crypto Robo-Advisor Work?

Crypto robo-advisors use complex algorithms to analyze market conditions and make investing decisions. These platforms consider factors such as volatility, market trends, liquidity, and risk tolerance. Upon a user's signup, robo-advisors typically ask a series of questions to understand the investor's risk tolerance, financial goals, and investment timeline.

Based on the information gathered, the robo-advisor then proposes an investment strategy aligned with the investor's profile. This strategy may include a diversified portfolio of various cryptocurrencies to balance potential gains and risks. The robo-advisor then executes this strategy, carrying out trades on behalf of the investor, and continually adjusts the portfolio based on predefined timeframes.

For example, you might want to play it safe and invest in a portfolio containing an equal allocation of Bitcoin and Ethereum. Your holdings might stray away from their initial target allocation of 50%. Robo-advisors will monitor the market and rebalance your portfolio on a monthly, quarterly, or bi-annual basis to bring your holdings back to their target allocations.

Advantages and Disadvantages of Crypto Robo-Advisors

Crypto robo-advisors offer several advantages. They simplify the process of investing in cryptocurrencies, which can be daunting given the high volatility and complexity of the crypto market. They also manage your portfolio by periodically rebalancing it every month or quarter.

The biggest advantage these platforms offer is that you can set up an account in only a few minutes and instantly access the volatile crypto market. There are no entry requirements, and everyone’s free to invest, no matter how new they’re to crypto.

Despite these advantages, crypto robo-advisors have certain drawbacks as well. The biggest concern is the volatile nature of the crypto market itself. Even with sophisticated algorithms, predicting cryptocurrency price movements can be challenging. Therefore, the risk associated with crypto investments remains high.

Another drawback is that your investment options are limited when using a robo-advisor. You might only have access to a certain number of cryptocurrencies, which prevents you from exposing yourself to the entire market.

Shrimpy Advisory: A Brand New Way to Invest in Crypto

Shrimpy Advisory is a brand new crypto robo-advisor that helps you access the cryptocurrency market hassle-free. The platform allows you to deploy your capital to a number of diversified crypto portfolios or even build your own custom portfolio. With Advisory, you can join the crypto market with a ‘set it and forget it’ mindset that minimizes the time you spend on managing your portfolio.

Shrimpy Advisory ensures that everyone can invest in cryptocurrencies by making the process as simple as possible. Your only job is to answer a few questions so that you receive your own custom investor profile, and Shrimpy Advisory will create a portfolio that suits your risk tolerance, financial goals, and investment timeline.

The platform provides you with exposure to all kinds of cryptocurrency sectors, from Web3 and DeFi to blue chips and utility tokens. All you have to do is monitor your portfolio, and Shrimpy Advisory will do the rest.

You don’t need to pay for a subscription or buy a product to use Shrimpy Advisory. All you have to do is pay an annual management fee of 1.2%, and you’ll be able to access the exciting and volatile crypto market in no time.

Conclusion

Crypto robo-advisors make investing in cryptocurrencies easier and quicker than ever. These platforms enable investors of all skill levels to join the crypto market for the first time and invest without any prior experience.

Robo-advisors are automated platforms that invest in diversified crypto portfolios on your behalf while constantly monitoring the market and rebalancing your portfolio. All you have to do is set the right expectations by creating an investor profile that faithfully represents your goals, and the platform will do the rest.

Keep in mind that using a crypto robo-advisor does not mean that you’re immune to losses. These platforms only simplify the investment process; they don’t guarantee profits.