How Social Trading Can Attract Traditional Investors To Trade Crypto?
With the success of social trading currently being noted by Forex professionals and the strategy being increasingly used by a number of individuals who are making great profits from it; it was not a stretch to believe that the trend of social trading has made its way over to cryptocurrencies.
Social trading as a strategy and its associated platforms have the capability the increase the overall adoption and uptake of cryptocurrencies by creating a bridge between traditional investors and the cryptocurrency market in a way that is incredibly helpful to beginners. In this article, we explore how social trading can attract traditional investors to crypto.
Social Trading Can Help Investors To Better Navigate The Volatile and Unpredictable Cryptocurrency Market.
One of the most well-known things about cryptocurrencies is that they are incredibly volatile, which can lead to great rewards like the current climate where Bitcoin has made gains of 65% on the year in 2020, as claimed by the Wall Street Journal. Alternatively, they can cause great losses such as when the price of Bitcoin caved by 65% between January and February 2018. The potential volatility in crypto as an asset class is like no other.
Navigating the cryptocurrency market as an investor having no experience in it can be a massive challenge and it can be very easy for a beginner to make ill-advised trades when they are not familiar with the events of the market or fail to adapt to new developments in a 24-hour market. Social trading can help to lower the initial barrier to entry in terms of experience for newer investors by allowing them to take advantage of the strategies of successful, more experienced investors; until they formulate their own strategies.
This is very important to the overall adoption of cryptocurrency by the masses; this is evidenced by the fact that only 1% of cryptocurrency exchange users actively participate in trading, with the other 99% opening accounts and not doing anything with it. This is the mentality that many traditional investors may have and this “hand-holding” method may help these investors to become more intuitive with the cryptocurrency market.
Imagine what the possibilities for growth could be in both cryptocurrencies and blockchain technology as a whole if even a further 5% of these individuals were to begin trading. Social trading provides a potential avenue to achieve this.
Social Trading Can Help Investors To Avoid Scams
Unfortunately, another problem that has been plaguing the cryptocurrency market since the beginning, has been the potential for scammers to appear everywhere. During 2019, it was founded that cryptocurrency-related fraud resulted in losses totalling $4.4 Billion, according to a report by CipherTrace. Unfortunately, the people that are most vulnerable to falling for cryptocurrency scams are those who don’t have much experience in the market and do not know the signs to look out for.
Now, there is a solution that can allow beginner crypto investors to utilize the expertise of more experienced investors to make safer trades, that is less likely to involve scams and therefore, a loss of earnings. Of course, no trader is perfect and the beginners will likely want to find their own strategies that work for them, but it can prove to be a very helpful learning tool for those that are new to the market but still want to get involved.
So far, we have looked into two ways in which social trading can attract traditional investors to trading crypto, by removing two of the biggest concerns and stumbling blocks which typically plague new entrants into the market.
Social Trading Involves Little to No Cost
One of the more understated benefits of social trading is that social trading platforms for cryptocurrency trading are generally available free of charge for you to interact and learn more about trading in the cryptocurrency market as a whole. The information that you need to succeed will be right at your fingertips in an instant.
This is a great unique selling point to traditional investors for cryptocurrency social trading as a whole, due to the fact that these new investors will not need to spend ridiculous amounts of money to begin learning about cryptocurrency trading strategies.
As has been discussed in this article, the increased popularity of social trading has coincided with a sudden explosion of trust in cryptocurrencies. This perfect storm potentially holds the key to driving more wide-spread adoption of cryptocurrencies around the globe, by providing new investors with a way to navigate the volatile market and avoid scams; usually at no extra cost.
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