Overconfidence in the long-term bullish growth of cryptocurrencies has led to a wide range of investors and traders being overexposed to bitcoin, etherium and other leading altcoins. A catastrophic collapse of 50% in just one month turned greed and exuberance into extreme fear.
The fact that cryptocurrencies are easy to invest in and participate in means that too many are unprepared for the volatile movements that cryptocurrencies like bitcoin are known for and can produce. That's why it's crucial for everyone - new or experienced - to consider copy trading as a way to diversify their portfolio and protect themselves from sharp drawdowns like the recent cryptocurrency market crash.
Crypto newbies learn from bitter experience in recent crash
The year 2021 began with a rush of excitement. Bitcoin soared from less than $30,000 to more than double in the first few months of the year. By April, not only was bitcoin and other cryptocurrencies in the mainstream media and back in the public spotlight, but Coinbase Global went public on Nasdaq.
However, the launch had the same effect as the introduction of CME futures in late 2017, which led to a downtrend rather than additional highs. Instead, while exuberance and greed were at their peak, it left new investors and even some seasoned professionals blind to the coming reversal.
The expectation of hundreds of thousands for BTC made those who were told to do so and HODL bought every drop, resulting in big losses as the cryptocurrency fell by 50% in the following days .
Experienced traders foresaw a bearish reversal of bitcoin
In such a bloodbath, it is hard to imagine that anyone could make a profit during such an event. Nevertheless, the transparent figures on exness app download global leaderboards have shown that plenty of traders are not only still in the black, but have hundreds to thousands of percent of profits made.
The list of strategy managers who regularly demonstrate success is almost endless, and the peer-to-peer trading community is growing rapidly every day. Word-of-mouth and PnL screenshots from strategy managers bragging about being one of the few to have closed the top of bitcoin have made these traders legends.
Thanks to Covesting's copy trading, any newcomer hurt by the sell-off can shake off and get back in the game, all with the help of strategy managers.
How capital diversification and copy trading can reduce risk
Covesting's copy trading module allows anyone to sign up to become a subscriber and copy trades by strategy managers who are flaunting their wares and climbing the global leaderboards. Robust risk and success metrics tell subscribers who to invest their capital for, and at any time they can stop following or switch to another strategy.
Capital allocation ensures that even when following a five-star Covesting strategy in the top five, no follower is exposed to excessive risk, as was the case during the cryptocurrency market crash.
Thus, if capital is spread across multiple strategies, even if one strategy fails, given past performance, the likelihood that other strategies will more than make up for one bad egg from the pile is high.
Increase your capital by becoming a follower or strategy manager
Becoming a Covesting follower is easy by registering on the award-winning CFD trading platform PrimeXBT. There, people can open Covesting accounts in BTC, ETH, USDT and USDC to start their journey to success.
Covesting and PrimeXBT, which offer stable coins as a margin account, are also another way to diversify and reduce exposure to cryptocurrency volatility. Using Stablecoin accounts for copy trading eliminates the risk associated with bitcoin or etherium as the base margin account currency, further increasing the variation for capital gains.
People with skills can also become strategy managers and increase their capital more than is otherwise possible. At the heart of the Covesting experience is the COV service token, which unlocks several useful account-level membership features such as increased subscribers, trading commission discounts and more. Membership is activated by placing the COV token in the Covesting module in the PrimeXBT dashboard.
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