A New Era of DeFi-backed Copy Trading

The finance world is on a rollercoaster ride and cryptocurrencies are picking up all the steam lately. Cambridge University’s 2024 “Global Cryptocurrency Benchmarking Study” showed that the number of cryptocurrency users rose by 101% over the two previous years.

A shedload of factors facilitated the steep rise in retail and institutional adoption. One of such is the growing concerns of inflation. During the pandemic, for instance, the US federal reserves resorted to printing more fiat currency to aid COVID-19 relief efforts. Over $3 trillion dollars was churned out in three and a half months early last year. This put the wind up on investors, forcing them to switch to inflation-free asset classes.

Many found a viable alternative in Bitcoin. The digital currency’s decentralized nature and steady ascent presented a great hedge against currency devaluation.

The dire need for cheaper and faster methods of cross-border remittance have further driven utility. Since interest peaked, leading traditional payment processors have incorporated cryptocurrencies to further increase exposure.

PayPal led the way by enabling US customers to buy and hold cryptocurrencies in November. Shortly after, Visa and Mastercard followed suit by integrating cryptocurrency-related services.

Retail and Institutional Trading at a Glance

Bitcoin emerged as the best performing asset of the decade at the end of 2024. It returned around 10 times more than the Nasdaq 100. To put things in perspective, $500 invested in bitcoin in 2010 will amount to more than $387 million in today’s market. There’s a wild rush for the red-hot asset class which has quickly become a favorite amongst seasoned and novice investors. 

Institutions are also betting big on bitcoin and adding the digital asset to their balance sheet. Tesla and MicroStrategy pioneered the new wave of institutional adoption by using bitcoin as a treasury reserve asset.  

The growing trend is doing the community a lot of good. Exposure to bitcoin is on the rise, due to lowered entry barriers and friendly regulations. 

This is evident in the massive increase in Asset Under Management (AUM) recorded by asset custodians. Since the past year, more than $23 billion worth of cryptocurrencies was added to Grayscale’s holdings. Its AUM inches closer to the $50 billion mark as per its latest filing. The company is currently seeking SEC’s approval to convert its bitcoin trust to an ETF.

Digital asset custodians offer investors indirect exposure to cryptocurrency investments. They also present a regulatory compliant framework for investing in cryptocurrencies. This way, investors can worry less about regulatory hurdles and the inherent risks of purchasing directly from exchanges. 

Although institutional adoption grabbed the headlines in 2024, retail interest likewise ramped up.

The above charts show that retail traders are swarming in droves to access the untapped opportunities in the cryptocurrency markets. Considering the wide variety of trading options and financial instruments available, it is hardly surprising.

DeFi in Copy Trading

Cryptocurrency trading requires a great deal of knowledge, like every other field. A lot of factors come into play when trading financial markets. Psychology, expertise, discipline, knowledge of technical and fundamental analysis and a proven strategy top the list. These can be a lot to handle for novice traders who constitute majority of the new entrants.  

Thankfully, the playground has been leveled by cryptocurrency copy trading solutions provider, Diabolo. CEO, Julien Onnen expressed confidence in the company’s values and its immense contribution to the growing digital space since its inception.

“The 2024 cryptocurrency boom is different from the 2017 bull run. Indeed, this one is driven by the arrival in a mass of large portfolios, listed companies, and institutional funds. A market that is reaching maturity. Diabolo, which has been present since 2017, acts as a beacon we keep our clients’ profitability on track, whatever the weather. “ He said.

Is Copy Trading Profitable?

Copy trading makes it possible for virtually anyone to make profits from trading, despite having no prior knowledge. It involves the use of technology to access and replicate positions entered by more experienced traders. These experienced traders usually receive a share of profits from users that copy their trades. This saves rookie traders the time and efforts required to master trading and allows them to enjoy a piece of the pie.

DeFi catalyzed a fundamental shift in cryptocurrency copy trading and France-based copy trading platform, Diabolo is one of the big names to remodel their services to mirror its concept. Its Head of Business Development, Thomas Menard said:

“The emergence of decentralized finance DeFi invites platforms and trading tools to reinvent themselves. It becomes relevant to develop a decentralised financial environment for copy trading. This approach would allow copy trading users to take advantage of new opportunities made possible by DeFi. Thus, the development of a decentralised copy trading solution proposes a disruptive approach to the current standards of centralized copy trading, bringing to its users the various advantages of DeFi.”

Thomas elaborated on the company’s approach to DeFi-based copy trading.

“This dynamic evolution of copy trading has been implemented by Diabolo through its DCASH token. This token is at the center of a truly decentralized environment, making the tools and services of the trading and DeFi world accessible to the greatest number of people. Thus, we will find within our ecosystem, a distinct approach to both centralized and decentralized copy trading services.”

Is DeFi a hype?

There’s a reason why there’s so much hype for DeFi since it came from under the bushel. As of last month, the total value locked (TVL) in DeFi smart contracts reached over $41 billion. In more relatable terms, it has formed the basis of hundreds of new innovations. 

DeFi based copy trading solutions can be integrated to complement existing tools. For example, DDexTrading forms the foundation of decentralised copytrading on Diabolo. Staking features may be integrated to further bolster activities and incentivize the copy trading ecosystem. 

These trailblazing features are poised to revolutionize copy trading in the cryptocurrency market.