Q&A: Top Copy Trader and Crypto Pundit on Their Market Predictions
Copy trading has exploded in popularity in recent years. Here, we ask established traders about what they get out of the bargain â€” and ask for their market predictions.
Thereâ€™s a palpable buzz in crypto markets right now. Copy trading is gaining momentum, as it allows investors to emulate the moves of experienced traders.
We spoke to Jay Smith, a popular trader on theÂ eToro platform who is otherwise known as Jaynemesis, as well as to Kevin Stanely, the host of the podcast CRYPTO 101. Here, they tell us more about how this feature works, share their predictions for Bitcoin and reveal which altcoins they believe are being badly overlooked right now.
1. Why would an established trader want someone to copy their moves? Whatâ€™s in it for them?
Jaynemesis: Money, respect, fame, community and fun! Weâ€™ve all seen the fake gurus on social media. If youâ€™re actually good, prove it! On eToro, all of my trades and stats are 100% transparent, so there is no debating whether or not I know what Iâ€™m doing, and I have the numbers to back me up. Itâ€™s also great for anyone who really cares about the projects they invest in. When people copy you, they are helping build the projects you like.
Kevin Stanely: An established trader wants someone to copy their moves because we love seeing people make money. Few things make us happier than being right, and there is no better way to gain respect and a devoted following than by putting your money where your mouth is, â€œopening up the kimonoâ€� and walking the walk.
2. How can the people copying a trader know that data about a portfolioâ€™s performance is accurate?
Jaynemesis: Transparency is key. Not only can you look at someoneâ€™s stats page on eToro, but you can go through their trade history and calculate it yourself. You can copy virtually and test it out, or you can ask the thousands of other copiers within the eToro community if it really works. This has been my full-time job for over three years now, and most people take the fact that I donâ€™t lose money for my copiers as quite convincing evidence that I know what Iâ€™m doing.
Kevin Stanely: You have to trust the social trading platform that is hosting that data. Thatâ€™s why we only use eToro â€” a brokerage that has been around for 13 years, has over 13 million registered users and has an overall untarnished reputation.
3. Doesnâ€™t all of the economic uncertainty brought about by COVID-19 make it impossible for even top traders to predict the markets?
Jaynemesis: Big corrections provide big opportunities. Thereâ€™s a Warren Buffet quote that comes to mind: “Be fearful when others are greedy and greedy when others are fearful.”
Kevin Stanely: Not at all, and in fact, quite the opposite. It makes it far easier. There is a famous saying that goes, â€œDonâ€™t fight the Fed.â€� I believe the Fed is the market, as it controls the supply of the money that is valuing assets. Put another way, money is not the â€œvalue,â€� but just the measuring stick of value.
When you increase the amount of money in the system, assets get repriced higher in terms of the increased monetary base. The scarce assets such as shares of companies, gold, Bitcoin, etc., are the value. Indeed, their fundamentals have declined significantly â€” with a projected decline in cash flows, earnings, growth, etc. â€” but their stock prices are the same or even higher than where they were pre-COVID-19. How is that dislocation between stock price and value possible? Money supply.
Over the course of the past few months, the Fed has bought trillions of dollars of junk debt in order to inflate the money supply. Moreover, it has stated it doesnâ€™t expect rates to go above 0% until 2022. The chairman of the Federal Reserve, Jerome Powell, also went on CBSâ€™s 60 Minutes to say there is infinite money. This is to signal to the market that the Fed is â€œbackstoppingâ€� asset prices and will stop at nothing to ensure that the global financial system has plenty of liquidity.
4. Do you buy into predictions that Bitcoin will hit $100,000 or believe PlanBâ€™s stock-to-flow forecast that predicts it could reach $288,000 by 2024?
Jaynemesis: I used to subscribe to making long-term predictions about Bitcoin, but these days I prefer to focus on the few months in front of me. I still believe it will eventually hit $100,000-plus per coin, but there are all sorts of black swan events that can blur the picture. After all, most people didnâ€™t see COVID-19 coming.
Kevin Stanely: Yes, absolutely. It is probably the single most robust quantitative model to forecast prices across commodities such as silver, gold and Bitcoin. Iâ€™m thinking that those prices will happen far, far, far sooner than 2024.
5. Have you got any bold predictions for where the crypto industry will be this time next year?
Jaynemesis: I actually believe the capitulation in altcoins will continue. The vast majority of alts have proven themselves incompetent at solving the problems they went out to fix after years of work. As the market matures, these altcoins will necessarily die out. Money and effort will instead be directed toward projects that are still showing great potential.
Kevin Stanely: This time next year, we will be full swing into a crypto bull run. Right now, we have hardly even begun it, but in 12 months, we will be in the thick of it. People who I havenâ€™t talked to in years will start reaching out to me asking about crypto, no doubt.
Ethereum 2.0 will have had a successful launch and will be rolling out its new stages. Blockchains will begin to be fully interoperable, and I suspect we will see more financial institutions getting comfortable with crypto ownership.
Layer-two scaling solutions will be rolling out, and many strong altcoins will be proving their theses. â€œSecurity tokensâ€� will be a big trend but wonâ€™t be known as â€œsecurity tokens.â€� We will just see transfer agents such as Carta and Broadridge start â€œfeeling the heatâ€� from smart contract platforms, which do the same thing they do, but in an automated, decentralized, instant way. Life will be far more optimized.
6. Are there any cryptocurrencies that you believe are undervalued or overlooked?
Jaynemesis: 1. Ethereum: Itâ€™s still here, and itâ€™s still attracting big companies and developers. Itâ€™s a survivor.
2. Basic Attention Token: I love this crypto. If you donâ€™t know it yet, go install Brave as your main internet browser, and youâ€™ll soon be converted.
3. Augur: This is a complex project thatâ€™s had complex problems, but they continue to work on it, and the potential is vast, if they can make it work.
Finally, I want to discuss IOTA. IOTA is extremely controversial, but I still believe in the words laid out by the founder when it first started: “IOTA will either be worth trillions of dollars or nothing.” Itâ€™s an innovative approach to crypto, and the potential applications, if they can get it working properly, are huge.
Kevin Stanely: Yes! They are all in our model portfolio, which is available at cryptorevolution.com!
7. Do you use copy traders on eToro? And if so, how do you communicate with your copiers?
Jaynemesis: Iâ€™ve been a popular investor on eToro since 2016, so Iâ€™ve built a small community. Generally, we talk through the eToro newsfeed, Twitter or my Discord server. I also put out blog posts and YouTube videos to help ensure all of my copiers are well informed about whatâ€™s going on.
Kevin Stanely: I communicate with them through the eToro platform in the comments thread on all the posts.
8. A classic debate in the crypto community is whether the halving has already been priced into Bitcoin. What do you guys think?
Jaynemesis: The halving is never fully priced in. If markets were that efficient, trading wouldnâ€™t be possible.
Kevin Stanely: Yes and no. Yes because every sophisticated investor in the crypto markets knows about the halving and uses that public information to factor into their models. But just because something is public info, it doesnâ€™t mean that the rest of the world that doesnâ€™t know about crypto is pricing it in.
In other words, only less than 1% of the world is â€œinâ€� crypto right now, so everyone else is discounting the effects of the halving. Ultimately, the majority of the world â€” and by that I mean the majority of the worldâ€™s money â€” is not pricing in the halving simply because they donâ€™t know about it.
9. Do you have any interesting or unusual investment strategies you can share with us?
Jaynemesis: I trade not only crypto but also invest in stocks. I approach both in the same way: I seek out disruption. Disruptive technology, disruptive business models and disruptive people.
Kevin Stanely: Have a system, and donâ€™t trade on emotions. For example, one good system in my opinion is: â€œSell half on a double.â€� Why? You enter a risk-free position at that point. Selling half on a double allows you to take out your principal investment and then invest with â€œhouse money,â€� helping to remove any sort of emotions from your investment decisions thereafter.
10. Copy trading, in some form anyway, has been around for decades. What makes eToro so different?
Jaynemesis: One thing I love about eToro is that there isnâ€™t a crazy minimum for people to start copying. Not everyone has $10 million lying around to invest in a good hedge fund! On eToro, you get the performance of a managed portfolio even if youâ€™re only copying with $200. Itâ€™s super accessible and an easy place for people to learn to trade and invest by copying people and learning from their strategies.
Itâ€™s also an amazing community. You usually donâ€™t get that flowing conversation with a fund manager, but on eToro, you can really engage with other traders and investors, share ideas and learn from each other.
Kevin Stanely: EToro has an amazing customer support team with very quick response times, which is a rarity in crypto. Moreover, it has crypto assets as well as stocks to invest in on one platform.
It also has an awesome â€œvirtualâ€� trading platform for people new to the market who want to get their feet wet before they put real money at risk. EToro is a brokerage that has been around for 13 years, has over 13 million registered users and has an overall untarnished reputation.
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