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Tags: cryptocurrency. markets | bitcoin | investors | maturing

Cryptocurrency Markets Struggle to Survive Awkward Growing Pains

Cryptocurrency Markets Struggle to Survive Awkward Growing Pains
(Elnur/Dreamstime)

By    |   Wednesday, 21 February 2018 03:08 PM EST

Although cryptocurrencies have been around since 2009 when Satoshi Nakamoto launched Bitcoin, most people have only recently heard about Bitcoin. What’s more, money is pumping into crypto investment markets at an extraordinary rate. Crypto exchanges are being overrun with new, eager customers, and the collective investment is quickly adding up.

At this point, cryptocurrency has moved beyond Bitcoin. Ethereum, Ripple, Litecoin, and dozens of other digital currencies have comprised a collective market cap of more than $400 billion, and, at times, a market cap of nearly $1 trillion. This is an astounding number considering the market cap was less than $20 billion a little more than a year ago.

Cryptocurrencies took off so fast that they exhibited forms of a collective mania and overwrought exuberance. Individuals poured hundreds and thousands of dollars into crypto markets and some even took riskier steps like mortgaging their house or using credit cards to purchase a stake in these emerging digital currencies.

For others, the process was more akin to gambling. Many were purchasing cryptocurrencies based on hype and the general assumption that all digital currencies would quickly and dramatically increase in value. As foolish as it sounds, this strategy was remarkably successful in 2017. Cryptocurrencies were on a nearly unanimous bull run, and practically every investment was creating significant returns.

However, in the first part of 2018, crypto markets are looking different. While continuing to thrive, they are not as ubiquitously optimistic as they once were. Unstoppable price increases are no longer a guarantee, and investors are being more selective about where they put their money. In general, this is a good thing. Cryptocurrencies are not going away, and there are new financial opportunities for investors who are willing to pursue intentional strategies to make a profit in these markets. In other words, it’s the start of a real investment market now.

Follow the Leader

Many crypto investors are relatively new to the industry. After all, most digital currencies are just a few years old, and the most prominent crypto exchanges aren’t much older. Therefore, many investors are turning to copy trading, a popular trading method in which established traders allow others to follow the moves or even replicate them completely.

While this method has been popularized in traditional financial markets, it is uniquely adept at equipping inexperienced crypto traders with intentional trading strategies so that they can be successful. It’s a way for amateurs to trade like professionals and for professionals to capitalize on their expertise.

A Community Approach

Crypto markets are uniquely communal. Digital currencies often boast large and active online communities which discuss the currencies and proliferate their purposes. Therefore, some copy trading platforms are creating investment communities where experienced investors and novice enthusiasts can learn and develop trading strategies together.

Signals, a blockchain-based platform is one example of a copy trading platform that’s embracing this model. By providing powerful research tools, access to data scientists, and a user-friendly platform, Signals allows anyone to create a trading algorithm. With Signals, crypto investors have the tools, insight, and ability to collaborate in order to create or locate a strategic approach to crypto trading, allowing users to capitalize on this burgeoning marketplace.

Enigma is a similar crypto trading platform which embraces many of the same characteristics however, its target audience are developers and programmers. Enigma is providing a place for investors to develop their trading approach and is significantly more technical. Users will need to be proficient in the Python programming language. Regardless, both Signals and Enigma represent platforms that are maturing crypto markets by allowing users to invest with intentionality rather than just blind luck.

Different Than the Rest

These community-based services are different than many other copy trading services because they offer the ability to develop and sell a trading strategy while also providing a collaborative network of data scientists, algorithmic traders, and traditional investors. In contrast, most other copy trading platforms offer à la carte, proprietary investment strategies which can be purchased through a subscription or an up-front fee and put less emphasis on the community and collaboration aspects which define so many digital currency enthusiasts.

A More Mature Market

Although crypto markets have cooled since the start of the year, many of its most prominent supporters are cheering this development. The unbridled and unfettered investment in anything and everything crypto was unsustainable, and it may have been hindering cryptocurrency’s continued integration into the mainstream financial ecosystem.

Copy trading platforms like Signals or Enigma are providing investors with the necessary tools to invest with intentionality and specificity. As a result, we may be seeing a more mature crypto market, which is good news for everyone. As exciting as 1,000% returns are, sustainable and strategic growth is a better recipe for long-term gains.

Jim Hoffer is founder and managing director at Hoffer Financial Consulting. Follow him on Twitter.

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InvestingAnalysis
Cryptocurrencies took off so fast that they exhibited forms of a collective mania and overwrought exuberance.
cryptocurrency. markets, bitcoin, investors, maturing
811
2018-08-21
Wednesday, 21 February 2018 03:08 PM
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