Crypto Market Investors Are Copying Influencers and Whales but Privacy Remains the Ultimate Hedge

The crypto market has been touted as one of the new investment niches where several millionaires have been minted within the past decade. This burgeoning ecosystem traces its roots to the early Bitcoin days in 2009; at the time, BTC was the only digital currency, with its price trading below $100. Today, this leading digital asset is trading at $38,000, having peaked in November 2021 to record a high of $69,000.

While it may seem like a bed of roses, the crypto market has cost some investors a dime given its volatile nature. After all, it is a zero-sum game, one player wins and the other loses. This is not to say that investors have quit trying their luck. Like traditional markets, traders in the cryptocurrency space leverage fundamental and technical analysis tools to evaluate possible investment strategies.

However, it is becoming increasingly difficult to rely on traditional analytical tools as the market comes of age. Crypto traders are now adopting other investment strategies such as copying influencers and whale accounts who are believed to have a significant influence on the market. This approach has worked for some investors and left others on the brink of collapse.

A Double-Edged Sword

Formally known as social trading, the trend of copying influencers has become a popular trading strategy for novice and veteran crypto traders. Benyamin Ahmed, a 12-year-old coder based in London, is one of the success stories. The young lad jumped on the NFT trend following an inspiration by leading crypto stakeholders who are part of the CryptoPunk and Bored Ape Yacht Club (BAYC) communities.

My second collection, Weird Whales, was inspired by a common pixelated whale meme seen in Minecraft, other channels and CryptoPunks, the most expensive and successful NFT project. I was also closely following projects such as Bored Apes.

Noted Benyamin during a recent interview.

So far, Benyamin has made over $600K from his Weird Whales NFT collection, a project that only cost $300 as the initial capital. Though NFT trading is slightly different from the normal spot and derivative markets, Benyamin’s instinct to follow the market’s trendsetters has unlocked massive fortunes for the 12-year-old.

The same cannot be said for one anonymous DeFi account that lost 99.7% after investing in EMN tokens, a project that had been launched by famous DeFi developer Andre Cronje. This was at the height of the DeFi summer boom in 2020, a time when Cronje was sort of a mini-god to most investors.

The prevailing narrative was that Cronje’s coins always moon within days; however, that was not the case for EMN which unfortunately suffered a $15 million exploit before it could take off. As a result, the anonymous DeFi account lost quite a fortune within a span of 90 minutes. EMN tokens dropped from $0.016 heading towards zero, leaving the account with $368 from an initial investment of $130,548.

Privacy is King

Amidst all the hullabaloo in crypto markets, one thing is certain; privacy and anonymity is king. As we have seen in the featured examples, one can easily gain or lose fortunes depending on their luck or the experience of the influencers/whales they choose to follow. That said, privacy-focused wallets such asBlockWallet can help one mitigate further losses, especially the ones attributed to security risks.

This Ethereum compatible wallet enables DeFi users to conceal their account balances and address origin when sending funds to another wallet. Ideally, BlockWallet pools its users’ funds into one smart contract pool which means that on-chain analysts cannot trace the exact address from which funds are sent. In doing so, BlockWallet helps DeFi users to maintain address anonymity, ultimately reducing the risk of being targeted by malicious attackers.

Final Thoughts

Despite being a sea of opportunities, the crypto market has shown that it can be unforgiving to naive investors. One needs to do proper due diligence before copying an influencer or whale; otherwise, it is pretty easy to go from riches to rags in the blink of an eye. More importantly, DeFi users ought to consider privacy-focused custodial services to avoid being exposed to hackers, who have in the past siphoned all the funds in some compromised accounts.