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The eToro social trading network is well known for its continuing innovations. The provider was the first to rely on CFD trading with the new cryptocurrencies that have gone through the roof in recent months.
Now there is a new way to invest in all cryptocurrencies at the same time, in order to be as well diversified as possible: The Crypto CopyFund. The new Crypto CopyFund includes the cryptocurrencies Bitcoin, Ethereum, Ripple, LiteCoin, Ethereum Classic and Dash.
How the fund works
The combination of seven different cryptocurrencies creates an optimally diversified portfolio on eToro. In this way, the investor can spread his risk and smooth out his performance curve, since underperformers are no longer so important. The two largest cryptocurrencies, Bitcoin and Ethereum, make up about two thirds of the Crypto Fund. Together with the other smaller cryptocurrencies, eToro covers 80 percent of the total market.
As in other well-known indices such as the DAX or Dow Jones, the cryptographic currencies are weighted according to their market capitalization. The portfolio is revalued on a monthly basis and, if necessary, restructured. An eToro Investment Committee evaluates the portfolio on an ongoing basis.
Cryptocurrencies can no longer be stopped
Trading in the new cryptocurrencies is extremely volatile, they lose and gain a large part of their value in euros or US dollars in a short period of time. This makes them particularly attractive for active traders. A major advantage of trading in cryptocurrencies is that prices are also quoted at weekends and therefore no price gaps occur, as is the case with equities.
Central banks and governments hold back
Central banks and governments should be watching out for the new cryptocurrencies, because they are not subject to any state or official control. Cryptocurrencies are simply traded between citizens. The question is, how long do you watch from the government side until you start throwing bludgeons at the trade. But at the moment, however, Bitcoin & Co does not seem to pose a serious threat to the established monetary system – at least not yet.
The restrictive regime in China views the crypto boom with suspicion and has already imposed compulsory fees for trading in these currencies. It is difficult at this stage to assess how far away we are from such developments in a more liberal Europe or the United States. To date, trading in bitcoin and other cryptocurrencies has been a unique opportunity to make exorbitant profits.
China develops its own cryptocurrency
However, instead of banning the cryptocurrencies completely, the Chinese government is starting a virtual counterattack and developing its own payment option based on blockchain technology. In the end, once all tests have been completed, this currency will be valid alongside the commercial physical currency and issued by the Chinese Volksbank.
Rumor has it that the virtual coin will include a national ID. It remains to be seen, however, whether this coin will have the same appeal as the decentralized free cryptos.
eToro CopyFunds, opportunities for new investments
Once launched as a simple social trading network where you could simply copy another trader, eToro is now able to follow whole portfolios and choose the best performing ones. With the eToro CopyFund, traders and investors can invest in predefined market strategies while benefiting from the cumulative knowledge of the masses.
The best performing strategies of the eToro TopTrader can be cumulated in a portfolio. In addition to the Top Trader CopyFund and the Market CopyFund, there is now also a third one: the Crypto CopyFund.
Top Investors on eToro
Known top traders on the eToro trading platform are Alex Plesk, Wesley Nolte and Jeppe Bonde (at time of writing):
How the Crypto CopyFund works
Although the volatility of the cryptocurrencies and the transparency of various new ICOs in particular leaves a lot to be desired, demand is not slowing down and we are now talking about a market volume of around 150 billion US dollars – with a strong upward trend. At eToro alone, the trading volume of crypto CFDs has quadrupled in the past 12 months. In total, more than 1 billion US dollars were traded on the platform.
Not only, but also thanks to the newly implemented futures contracts, bitcoin is gaining acceptance and is being accepted and traded by more and more global players.The positive aspect for investors and traders alike is that the more you jump on the bandwagon, the higher the liquidity, the more stable the price trend and the lower the spread.
On the eToro platform, you can not only trade crypto CFDs, but also invest in the underlying asset itself. The buyer then receives his Bitcoin, Ethereum, Ethereum Classic, Litecoin or Ripple 1:1 in his depot. As a result, eToro not only promotes acceptance but also the spread of cryptocurrencies.
Bitcoin transaction – how it works
While buying and selling a simple CFD at eToro is comparatively simple and changes hands in real time, a bitcoin transaction is a bit more complex. At the same time, this is currently Bitcoin’s biggest obstacle: the transaction times are comparatively long and cost a lot of energy. The blockchain is based on a decentralized network of numerous servers, which are referred to as so-called nodes.
When a user now runs the Bitcoin software, he/she makes server capacity available and becomes a node himself/herself. The moment bitcoins are sent from one node to another, the transaction is processed and verified by all nodes.
As soon as the transfer is completed, it will be recorded in the blockchain. This also makes the blockchain a digital public cash book (the so-called ledger) in which each Bitcoin transaction is unambiguously tracked. A small side effect: Traditional banks become completely superfluous with such a payment solution.
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