Investors, after crypto crash, turn to social and competitive trading in 2023
A brutal winter in crypto is thawing into a promising spring. And as the industry looks to revitalize its reputation, a new trading model is helping to rebuild credibility by providing a path for users to make more informed buying and selling decisions, all by learning from other traders.
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With the cryptomania of the past few years, it seems everyone had a “fear of missing out.” They saw people on Reddit and Twitter – celebrities in FTX ads – and they thought everyone was making a fortune and missing out. So many people bought into the end of the bubble and lost their savings. The truth is that very few people made as much money as they claimed. They tweeted about their 500% return on one coin and failed to mention the ten other altcoins they lost money on. Lack of transparency led to a belief that you were the only one not making money.
A look at social and competitive commerce
Social and competitive trading platforms such as Zingeroo and WeBull now invite traders to engage with friends and other users. In Zingeroo’s case, compete in weekly and monthly contests for prizes—with leaderboards that encourage better decision-making. On the platforms, trades are visible to all users, injecting social pressure to facilitate more responsible decision-making. That means users can also study the strategies of the most successful traders and avoid the mistakes of the smallest while watching how their peers perform.
Interestingly, traders participating in contests had 63% fewer meme shares, according to Zingeroo, suggesting that investors tend to be more cautious when they know others may be watching or when trying to find a place on the leaderboard . And a recent analysis of Zingeroo traders by a leading brokerage found that users were more risk averse than traditional retail investors.
“Solo investing can be a hard and lonely task, especially for amateur traders,” said Zoë Barry, Zingeroo’s racing car series founder, founder and CEO. Barry is recognized as the only woman to launch a retail platform in the US in the last decade. Before Zingeroo, Barry raised over $42 million for his previous venture, ZappRx, before Allscripts acquired it in June 2019. “Making investing a competition between friends can inspire traders to act more responsibly, and ultimately be more successful, while as the investment becomes more social and more fun. We are the first and only FINRA-regulated ‘competitive’ crypto trading platform, and we believe this new interface is the antidote to many of the problems solo traders have faced over the past 18 months.”
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In recent weeks, the crypto market has seen a 12% increase in trading volume, with some of the most popular coins – including Bitcoin, Solana, Cardano, Polygon and Ether – trending upwards for the first time since last year’s crash.
At the same time, social trading platforms only continue to grow. For example, users can now trade over 40 digital currencies on Zingeroo’s platform. WeBull offers a similar number. But the platforms realize more work needs to be done to bolster confidence in the crypto industry after a string of recent damaging headlines. That’s why Zingeroo routinely touts its credentials as the first FINRA-regulated trading platform of its kind.
“By achieving FINRA accreditation, we hope to bring some credibility and integrity back to an industry that has been marred by controversy and reassure our users that their investments are being responsibly managed,” Barry said.
It is a stark contrast to the current Wild West of decentralized currency trading. And after FTX, those are the qualifications that traders will look for in their platforms of choice.
“Crypto is suffering from a serious reputational crisis that threatens to undermine the future of the digital currency,” Barry said. “Platforms like Zingeroo that work to win the favor of regulators give others a way forward to rebuild public trust.”
The journey to change crypto’s perception will not be easy, especially as the FTX trial continues to receive intense public attention. But Zingeroo and WeBull show how trading platforms can learn from their mistakes and put the industry on the road to recovery.
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