How Copy Trading Is Critical To A Diversified Portfolio

Too much confidence in a long term crypto bull run left a wide range of investors and traders overly exposed to Bitcoin, Ethereum, and other top altcoins. A catastrophic 50% collapse in only one month has turned greed and exuberance to extreme fear.

The fact that crypto is easy for anyone to invest in and get involved means that too many aren’t prepared for the volatile moves that cryptocurrencies like Bitcoin are known for and can produce. That’s why it is critical for anyone – new or experienced – to consider copy trading as a way to diversify their portfolio and protect against dramatic drawdowns like the recent crypto market crash.

Newcomers To Crypto Learn The Hard Way In Recent Crash

2021 started off with a bang. Bitcoin blasted off from under $30,000 to more than double in the first few months of the year. By April, not only was Bitcoin and other cryptocurrencies all over the mainstream media and once again in the public eye, but Coinbase Global was going public on the Nasdaq.

The launch, however, had a similar effect as the introduction of CME Futures in late 2017 which resulted in a downtrend, not additional highs. Instead, while exuberance and greed were at their highest, it led to new investors and even some experienced professionals alike being blind to the reversal that was coming.

The expectation of hundreds of thousand per BTC kept those told to do so and HODL buying every dip, leading to more losses as in the days that followed the cryptocurrency fell by 50%.

Experienced Traders Saw Bearish Bitcoin Reversal Coming

In such a bloodbath, it can be difficult to imagine anyone being profitable during such an event. However, the transparent metrics within the Covesting global leaderboards had plenty of traders not only still in the green, but with hundreds to thousands in the percentage of profits generated.

The list of strategy managers who regularly show success is nearly endless, with the peer to peer trading community growing expansively by the day. Word of mouth and PnL screenshots from strategy managers boasting about being among the rare few who shorted the Bitcoin top, has made these traders legends.

With Covesting copy trading, any newcomer that got shredded in the selloff can dust themselves off, and get back in the game, all with the help of strategy managers.

How Capital Diversification And Copy Trading Can Reduce Risk

The Covesting copy trading module lets anyone sign up to become a follower and copy the trades of strategy managers who strut their stuff and rise the ranks of the global leaderboards. Robust risk and success metrics tell followers who to put their capital behind, and at any time they are welcome to stop following or switch it up with another strategy.

Spreading capital around ensures that even when following a five-star Covesting strategy in the top five has a losing streak, no follower is overly exposed in the same way they were in the crypto market crash.

This way, if capital is allocated across several strategies, even if one is unsuccessful, given past performance the probability the other strategies will more than make up for the one bad egg of the bunch is high.

Grow Your Capital By Becoming A Follower Or Strategy Manager

Becoming a follower on Covesting is simple by registering on the award-winning CFD trading platform PrimeXBT. There, individuals can open Covesting accounts in BTC, ETH, USDT, and USDC to begin following their way to success.

Covesting and PrimeXBT offering stablecoins as an account margin is also another way to stay diversified and alter risk exposure to crypto volatility. Using stablecoin accounts to copy trading, there’s no risk associated with Bitcoin or Ethereum as the base margin account currency, further increasing the changes for capital gain.

Individuals with skills can also become a strategy manager and grow their capital further than what is otherwise possible. At the center of the Covesting experience, is the COV utility token, which unlocks several account-level membership utilities, such as an increase in follower counts, trading fee discounts, and much more. Memberships are activated by staking COV tokens within the Covesting module in the PrimeXBT dashboard.