HashKey XPert is Hashkey Group’s full-service digital asset brokerage platform, combining market-leading insights in digital assets and a host of bespoke investment products developed in-house that match the requirements and strategies of institutional investors.
Why did we create XPert?
HashKey Group, along with our strategic partner Wanxiang Blockchain, has long been leaders in the financing and development of digital assets, decentralised finance (DeFi) and blockchain technologies. As the digital asset market matured it became increasingly apparent from our conversations with industry peers that the existing digital asset platforms and services providers have failed to satisfy and comply with the specific needs and requirements of professional and institutional investors, particularly those with fiduciary responsibilities over client money.
Whilst there is considerable excitement over the potential of digital assets, there were three recurring themes that have hindered their widescale adoption among institutional investors:
- Existing solutions are not well suited to deliver the level of client service that professional investors demand and require
- Concerns over the safety and security of digital assets
- Lack of expert knowledge and advice to help them add digital assets to their portfolio in a way that aligns with their investment strategy
HashKey’s goal is to bring the rigour, professionalism and commitment to client service expected of traditional financial institutions and apply those principles to digital assets. We believe in the long-term potential of digital assets in becoming an integral part of any balanced investment strategy. However, without the development of a robust financial architecture and mainstream adoption by professional investors and institutions, that potential is unlikely to be realised.
HashKey XPert was formed with two objectives
- Develop an institutional-grade brokerage platform for digital assets
- Help investors integrate digital assets into their portfolios with expert guidance and advice
Why add digital assets to your portfolio?
Interest in digital assets has exploded over the past 18 months. The total market capitalisation of cryptocurrencies rose from US$190 billion in January 2020 to reach an all-time-high of US$2.5 trillion in May 2021. Over the past 4 years, Bitcoin has delivered average annual returns of 103 percent per annum; excluding the sustained bull run between October 2020 and May 2021, annual returns still averaged 25 percent. Although the recent market correction saw significant price falls, not only was there no significant reduction in trading activity, the increased price volatility has also opened up new trading strategies and opportunities.
There are three key benefits of adding digital assets to your investment portfolio –
- Long-term potential
As mentioned above, digital assets have delivered unparalleled returns in recent years. Whilst this is no guarantee of similar performance in the future, the fact that digital assets are still at an early adoption phase means that there still is strong potential for future gains. Additionally, the inclusion of an novel asset class with different fundamental value drivers can substantially increase portfolio diversification. A recent analysis by SEBA, a Swiss bank focused on digital assets, found that allocating just 4 percent of one’s total assets to digital assets increased the Sharpe ratio, a measure of portfolio diversification, by 50-90 percent, while a more diversified basket of digital assets generated even larger gains. HashKey’s internal analysis shows that returns from market-neutral trading strategies are effectively uncorrelated to traditional asset classes; for example spot-futures arbitrage strategies have a correlation coefficient of just 0.06 to the S&P 500.
As the digital asset markets developed, volumes and volatility have simultaneously increased, which are to be expected in an emerging asset class, especially given the large numbers of retail investors that have recently entered the market. Whilst volatility increases the risk of simple long strategies, it creates opportunities for quantitative trading strategies that hedge market risk. As the market continues to mature, new tactical opportunities are likely to emerge.
Over the long term, taking into account the transformational potential of blockchain technologies and digital assets, it is entirely reasonable to imagine a world in which the provision of financial services are fundamentall reshaped by decentralised technologies. There are many different forms of digital assets, each with their unique characteristics and use cases. Whilst Bitcoin is the largest digital asset by market cap, the Ethereum network is touted as the foundation of multiple innovative solutions thanks to its smart-contract functionality and higher performance.
Why choose HashKey XPert?
What truly makes HashKey XPert unique is our team. Our sales-traders combine deep expertise in digital assets and blockchain technologies with extensive experience in traditional buy- and sell-side financial institutions. Every client is assigned a dedicated point-of-contact to ensure that they always have access to someone who can provide expert advice and understand their investment strategy.
HashKey’s leadership team brings decades of senior experience at regulated financial institutions. As we developed XPert we drew heavily on this experience to develop a platform specifically designed to meet the needs of professional and institutional investors. Our aim was not to reinvent the wheel – rather it was to take the best industry practices across client service, trade execution, risk management and custody, and apply them to digital assets. In parallel we utilised our extensive experience of developing structured financial products and investment vehicles to create a range of investment products on the HashKey XPert platform that provide multiple access routes to investors.
We understand that safety and security are a key priority for every investor. This is why we developed our own institutional-grade custody solution using the latest technology provided byour partners at Wanxiang Blockchain, where our client’s digital assets are fully insured and securely stored on advanced wallet hardware. The result was a full-service brokerage platform for digital assets that offers comprehensive and top-class trading, execution, settlement and custody services.
We believe that digital assets are still at an early stage of maturity. HashKey Group and our strategic partner Wanxiang Blockchain have an extensive global network of partner organisations that are engaged in researching and developing the latest blockchain technologies and DeFi applications. We provide access to a unique deal pipeline and the opportunity to invest in revolutionary projects and early-stage companies that will one day power the future of finance – opportunities that are exclusively available to our clients.
Despite the continued surge in interest and activity, digital assets are still a long way from achieving mainstream adoption. This presents both short- and long-term opportunities. In the immediate future investors can make substantial returns and extract excess value from the market through a range of quantitative and arbitrage strategies. In the medium term, an increase in adoption will likely drive valuations higher. And in the long-term we are optimistic that digital assets will form an integral part of any well-diversified investment portfolio. At HashKey, we strive to build the underlying financial architecture that facilitates that change whilst providing the highest levels of service and execution.