Crypto Funds + Copy Trading = ???
The key to investing is having an edge. An investor with an edge is someone who has an advantage that increases his likelihood of being profitable compared to other market participants.
A common advantage includes having already participated in a full market cycle. Someone who witnessed both bullish and bearish price action knows how to act once the next cycle begins, granting him an edge over those who haven’t.
Another good example is informational advantage. Those who leverage social skills join circles full of professional investors, developers, founders, and VCs. They get to learn about the hottest new NFT collections or cryptocurrencies that are about to launch. The average investor won’t hear about the opportunity until it’s already too late.
Investing/trading edge comes in many forms and represents an indispensable tool. But due to the cyclical nature of markets, new investors don’t have the time to gain an edge before the bull market ends.
What ends up happening is that newcomers buy the wrong tokens or invest in projects designed to siphon funds from retail to VCs. They burn their wealth and time while trying to learn the ropes.
But the age of requiring skill to make profits is long gone; you can simply copy those who are already skillful.
Copy Trading: The Lazy Way to Make Money
A part of human nature is to mimic those who are successful. If someone is consistently good at something for a long period of time, you’ll reach the conclusion that you can replicate their success by copying their actions.
A common strategy in the crypto world is to follow traders and investors with a good track record. If they share their trades publicly, you can enter the same trades and reap the words while investing zero effort. You can’t go wrong if you copy their entry, exit, TP, and SL.
Or when an NFT collector has a track record of buying profitable JPEGs, people tend to record his address and track his activities via on-chain analysis. They then find out that the collector has bought several JPEGs of a new project and follow suit. Soon enough, they end up in profit because the collector is simply too good at knowing where to distribute capital.
There is even a popular Twitter account that tracks Jim Crammer’s stock market predictions. Crammer tends to be hilariously wrong about the market almost every single time. Some people do the opposite of what he says and counter-trade him to make money.
There are various people and entities you can copy. However, the most interesting strategy of them all is to copy crypto trading funds.
Copying Crypto Trading Funds
Imagine a team composed of the most intelligent investors. Their job is to study massive amounts of quantitative data and apply a custom-built model to it that determines which trades or projects might be profitable.
If you put together a group of experts whose sole existence is to work together and make money, what do you think might happen? They’ll make money like no one else can — hence why investors religiously follow the grandiose activities of trading funds.
For a long time, groups such as 3AC, Alameda Research, and a16z used to be the crème de la crème of crypto trading funds. If either of the firms participated in a project’s funding round, you simply knew that it would be the next big thing.
They bought, you bought, and everyone else bought. That’s the name of the game.
And that’s how people traded! They didn’t have to study the market, analyze price action or spend hours reading white papers and articles. They’d simply track a fund’s activity and copy them. It sounds lazy, but it works, and the fact it worked is what everyone was interested in.
You can copy trading funds via:
- On-chain tracking
- Portfolio trackers
- Social media announcements
For example, if you find out Alameda Research’s blockchain address, you can track their on-chain activity. You buy when they do, and you sell when they do. If they slowly move their allocations from one asset to another, you know what to do.
If you don’t have the time to track addresses or write a bot that alarms you about a fund’s activities, you can use portfolio trackers. Messari has several portfolio trackers for well-known crypto funds.
However, portfolio trackers are not as accurate because they’re mostly manually updated. Hours or days might pass before someone updates the fund to its most recent version.
The third solution is to track a fund’s social media accounts. More often than not, trading funds will publicly announce that they participated in a funding round. For example, Alameda might announce that they spent $25m on a project’s funding round. The problem with this strategy is that you only receive updates on high-level investments. A firm won’t publish every trade or investment it makes.
That sums up the list of strategies you can employ to copy trade trading funds. On-chain analysis is ideal if you have enough time. But if you don’t, pick the next best thing.
Don’t like any of the strategies we mentioned? Don’t worry; there’s one last strategy we haven’t mentioned yet…
Shrimpy: Combining Funds and Copy Trading
Shrimpy is an automated portfolio management platform that makes your investing activities more efficient. With the help of trading bots, Shrimpy helps you rebalance your portfolio, DCA into crypto, backtest crypto strategies, copy trade, and create custom index funds.
Our custom index fund feature allows you to create an automated crypto portfolio with set allocations, allocation ranges, and automations.
You can pick any asset you want and add it to the index fund. Or you can add multiple cryptocurrencies from certain asset groups by selecting a tag. And guess what? Apart from popular tags such as DeFi, NFTs, and smart contracts, we have also included crypto funds!
You can select a tag like Pantera Capital portfolio, and your portfolio will include all the assets that the trading fund is invested in. You can also change allocations and customize the portfolio even further.
You can effectively copy trade crypto funds by using Shrimpy. And you don’t have to perform any on-chain analysis or portfolio tracking either — Shrimpy does it for you.
Sounds interesting? Sign up here and discover everything Shrimpy has to offer.
Shrimpy is an automated portfolio management platform that helps cryptocurrency investors manage their capital through the use of a simple and intuitive app that saves time and money with the power of automation.
To find out more about our platform and discover how it can jumpstart your crypto journey, feel free to visit our main website.