Social Trading Tools Might Be the Key to Simplifying Crypto Trading for Retail
Investors
Cryptocurrency means different things to different
people. To early adopters, millennials, techies, geeks, and risk-loving
investors, cryptocurrency is the future of money. During bull
markets, the incredible performance of cryptocurrencies over
traditional assets such as equities, real estate, and gold often
makes a solid case for why crypto deserves a place in your
portfolio. However, if you ask traditional financial institutions,
regulators, and governments – you’ll hear the usual diatribe about how
crypto is highly-risky, speculative, and unregulated. Nonetheless, the
recent news that China is getting ready to launch a state-backed
cryptocurrency has opened the proverbial Pandora’s box. The world will
eventually accept that crypto is here to coexist with fiat (maybe
displace fiat) over the long term. The more interesting point is that the
consistent outperformance of cryptocurrency over other legacy Wall Street
assets is driving growing interest in the cryptocurrency
market. For instance, in the year-to-date period, Bitcoin has recorded
more than 140% price gains to septuple the performance of the S&P 500 and
Dow Jones Industrial Average in the same period as seen in the chart below.
Bitcoin debuted in 2009 as an application of Blockchain technology.
Blockchain itself is built on complex maths, cryptography, and computer science.
Traditional finance often advises against investing in things you don’t
understand; hence, many people who would love to benefit from the huge
potential in cryptocurrencies are not quite sure that they understand how
blockchain and cryptocurrencies work. The worst part is that
crypto in its current form looks complex with strings of alphanumeric
wallet addresses, network confirmation trees, hash rates, and consensus
algorithms. The market also lists more than 4000 different coins,
altcoins, tokens, and the 2017 ICO boom has left an exponentially larger number
of shitcoins, scamcoins, and deadcoins. Hence, it is often difficult to sift
through the information overload to find coins that deserve a place in
your portfolio. Another layer of difficulty that makes it hard for
retail investors to get started with crypto is the fact
that the whole crypto market is less than 10 years old. There are
not many tools to screen coins, build trading strategies, or
enough data against which you can backtest your strategies. The highly
volatile nature of cryptocurrencies powered by speculative entry and exits,
coupled with manipulative moves by market whales, often makes it
difficult for many inexperienced traders to survive in the market.
Human beings are social beings, we are wired to look up to others for
companionship, guidance, and direction. eToro is leveraging the social
predisposition of humans to lower the barriers to cryptocurrency
trading, by providing a platform for people who have mastered the
cryptocurrency market to share their expertise and experience with
other crypto traders and investors. Last week, eToro
announced the launch of its CopyTrader feature for crypto
traders and investors in the U.S. CopyTrader is an innovative
system that democratizes trading for all types of assets and all
traders irrespective of their trading experience and
expertise. Through CopyTrader, eToro users can follow other top-
performing traders and set up their trading accounts to
automatically copy and replicate the trades of these experts
proportionally. By using the CopyTrader feature, new traders can
shorten the steep learning curve that often discourages many retail
traders from getting involved with cryptocurrencies. New traders
can leverage the expertise of experienced traders in developing
trading strategies, entering the market, exiting profitable
trades and making decisive escapes from losing trades. The more
reassuring part is that traders retain full control of their accounts
because CopyTrader is non-intrusive. Hence, you can decide if you
want to continue or stop copying the trade of any trader at any time if you are
dissatisfied with the performance of their portfolio because of
the underlying philosophy of decentralization. Going forward, more retail
traders might be inclined to explore crypto trading because
CopyTrader could potentially improve the odds of having profitable
trades without any active participation in the market. CopyTrader
is an innovative and novel idea, but the question remains if people will
trust the performance of their portfolio to the actions of another trader. From
a logical standpoint, many people already trust their financial future to other
traders through assets such as mutual funds on Wall Street. You’ll even pay the
fund manager for their services even though you don’t know exactly what they are
doing, and they can’t make any guarantees on the performance of your portfolio.
However, the social trading component of CopyTrader provides
access and insights into the trading activities of other traders in a
provably transparent manner. Guy Hirsch, US Managing Director of eToro, notes
that “CopyTrader can help anyone to build their wealth in a simple and
transparent way. Users who want to leverage the crypto asset class can
now simply look for an investor with a proven track record and just hit copy to
execute the same trades automatically.” eToro has already signed up several
popular crypto influencers such as Nicholas Merten, the host of the
DataDash YouTube channel, and #11 Ranked Welterweight UFC fighter Ben Askren.
The intentional onboarding of crypto influencers on CopyTrader could foster
increased confidence in the platform while accelerating the increased
participation of retail investors in the cryptocurrency market. People who are
confident in their crypto trading expertise can also apply to join
eToro’s Popular Investor program where they can also make their trading
moves and strategies available for the community to copy. In exchange for
allowing the community to access and copy your trading strategies, you’ll get a
chance to build up a social following, get recognition for your trading
expertise, and find ways to monetize your trades. Note: This article
contains links to third-party websites or other content for information purposes
only (“Third-Party Sites”). The Third-Party Sites are not under the control of
CoinMarketCap, and CoinMarketCap is not responsible for the
content of any Third-Party Site, including without limitation any link contained
in a Third-Party Site, or any changes or updates to a Third-Party Site.
CoinMarketCap is providing these links to you only as a convenience, and the
inclusion of any link does not imply endorsement, approval or recommendation by
CoinMarketCap of the site or any association with its operators. This article is
intended to be used and must be used for informational purposes only. It is
important to do your own research and analysis before making any material
decisions related to any of the products or services described. This article is
not intended as, and shall not be construed as, financial advice.
Investors
Cryptocurrency means different things to different
people. To early adopters, millennials, techies, geeks, and risk-loving
investors, cryptocurrency is the future of money. During bull
markets, the incredible performance of cryptocurrencies over
traditional assets such as equities, real estate, and gold often
makes a solid case for why crypto deserves a place in your
portfolio. However, if you ask traditional financial institutions,
regulators, and governments – you’ll hear the usual diatribe about how
crypto is highly-risky, speculative, and unregulated. Nonetheless, the
recent news that China is getting ready to launch a state-backed
cryptocurrency has opened the proverbial Pandora’s box. The world will
eventually accept that crypto is here to coexist with fiat (maybe
displace fiat) over the long term. The more interesting point is that the
consistent outperformance of cryptocurrency over other legacy Wall Street
assets is driving growing interest in the cryptocurrency
market. For instance, in the year-to-date period, Bitcoin has recorded
more than 140% price gains to septuple the performance of the S&P 500 and
Dow Jones Industrial Average in the same period as seen in the chart below.
Bitcoin debuted in 2009 as an application of Blockchain technology.
Blockchain itself is built on complex maths, cryptography, and computer science.
Traditional finance often advises against investing in things you don’t
understand; hence, many people who would love to benefit from the huge
potential in cryptocurrencies are not quite sure that they understand how
blockchain and cryptocurrencies work. The worst part is that
crypto in its current form looks complex with strings of alphanumeric
wallet addresses, network confirmation trees, hash rates, and consensus
algorithms. The market also lists more than 4000 different coins,
altcoins, tokens, and the 2017 ICO boom has left an exponentially larger number
of shitcoins, scamcoins, and deadcoins. Hence, it is often difficult to sift
through the information overload to find coins that deserve a place in
your portfolio. Another layer of difficulty that makes it hard for
retail investors to get started with crypto is the fact
that the whole crypto market is less than 10 years old. There are
not many tools to screen coins, build trading strategies, or
enough data against which you can backtest your strategies. The highly
volatile nature of cryptocurrencies powered by speculative entry and exits,
coupled with manipulative moves by market whales, often makes it
difficult for many inexperienced traders to survive in the market.
Human beings are social beings, we are wired to look up to others for
companionship, guidance, and direction. eToro is leveraging the social
predisposition of humans to lower the barriers to cryptocurrency
trading, by providing a platform for people who have mastered the
cryptocurrency market to share their expertise and experience with
other crypto traders and investors. Last week, eToro
announced the launch of its CopyTrader feature for crypto
traders and investors in the U.S. CopyTrader is an innovative
system that democratizes trading for all types of assets and all
traders irrespective of their trading experience and
expertise. Through CopyTrader, eToro users can follow other top-
performing traders and set up their trading accounts to
automatically copy and replicate the trades of these experts
proportionally. By using the CopyTrader feature, new traders can
shorten the steep learning curve that often discourages many retail
traders from getting involved with cryptocurrencies. New traders
can leverage the expertise of experienced traders in developing
trading strategies, entering the market, exiting profitable
trades and making decisive escapes from losing trades. The more
reassuring part is that traders retain full control of their accounts
because CopyTrader is non-intrusive. Hence, you can decide if you
want to continue or stop copying the trade of any trader at any time if you are
dissatisfied with the performance of their portfolio because of
the underlying philosophy of decentralization. Going forward, more retail
traders might be inclined to explore crypto trading because
CopyTrader could potentially improve the odds of having profitable
trades without any active participation in the market. CopyTrader
is an innovative and novel idea, but the question remains if people will
trust the performance of their portfolio to the actions of another trader. From
a logical standpoint, many people already trust their financial future to other
traders through assets such as mutual funds on Wall Street. You’ll even pay the
fund manager for their services even though you don’t know exactly what they are
doing, and they can’t make any guarantees on the performance of your portfolio.
However, the social trading component of CopyTrader provides
access and insights into the trading activities of other traders in a
provably transparent manner. Guy Hirsch, US Managing Director of eToro, notes
that “CopyTrader can help anyone to build their wealth in a simple and
transparent way. Users who want to leverage the crypto asset class can
now simply look for an investor with a proven track record and just hit copy to
execute the same trades automatically.” eToro has already signed up several
popular crypto influencers such as Nicholas Merten, the host of the
DataDash YouTube channel, and #11 Ranked Welterweight UFC fighter Ben Askren.
The intentional onboarding of crypto influencers on CopyTrader could foster
increased confidence in the platform while accelerating the increased
participation of retail investors in the cryptocurrency market. People who are
confident in their crypto trading expertise can also apply to join
eToro’s Popular Investor program where they can also make their trading
moves and strategies available for the community to copy. In exchange for
allowing the community to access and copy your trading strategies, you’ll get a
chance to build up a social following, get recognition for your trading
expertise, and find ways to monetize your trades. Note: This article
contains links to third-party websites or other content for information purposes
only (“Third-Party Sites”). The Third-Party Sites are not under the control of
CoinMarketCap, and CoinMarketCap is not responsible for the
content of any Third-Party Site, including without limitation any link contained
in a Third-Party Site, or any changes or updates to a Third-Party Site.
CoinMarketCap is providing these links to you only as a convenience, and the
inclusion of any link does not imply endorsement, approval or recommendation by
CoinMarketCap of the site or any association with its operators. This article is
intended to be used and must be used for informational purposes only. It is
important to do your own research and analysis before making any material
decisions related to any of the products or services described. This article is
not intended as, and shall not be construed as, financial advice.