Navigating the crypto markets, however lucrative it can be, is not easy.
Even though we find ourselves in the midst of a bull market, identifying opportunities and managing risk requires you to understand technicals and order book dynamics as well as the fundamentals of a coin and their relevance in a macro context.
Over the past two to three years, we’ve seen the emergence of countless data aggregators and analytical tools – CoinMarketCap, CryptoCompare, BlockChair, TheTie, Coinmetrics, the list goes on and on. Such platforms help to diagnose market sentiment and form a view on the market.
With regard to Bitcoin, many valuable reports have also been published by asset managers, crypto funds, financial institutions and exchanges, including a recent report on Bitcoin in 2021 by AAX.
But despite the abundance of resources, much of the decision-making in retail actually happens on YouTube and Telegram as trading communities take shape around Key Opinion Leaders (KOLs) to discuss price movements and other significant developments.
In this post, we focus on these dynamics around KOLs and discuss what the benefits and risks are of following a KOL in trade.
Social Trading On The Rise
Social trading is nothing new. It’s been around for years with stock trading apps like EToro offering a Facebook-type of environment where traders can share their views on the market and copy successful investors’ portfolios. PocketTrader is another app that is taking this to the next level by offering users the ability to engage in social charting.
In crypto, we can see trading communities coming together on YouTube, Twitter and Telegram, with KOLs guiding these communities and providing valuable education around specific projects, technicals and developments in the industry.
The risk, some might say, is that ill-inclined KOLs could potentially use their influence to try and manipulate small cap markets, for example by pushing their viewers to pump the price of some token before signalling core members to sell theirs. However, compared to 2017, the space has improved a lot in terms of integrity and quality of analysis.
Successful YouTube KOLs will usually be cautious when it comes to speculating on seedling altcoins and can play an important role in managing community sentiment. Their popularity and ability to retain members stems from their trustworthiness, objectivity and ability to create a good atmosphere online.
In fact, good quality YouTube KOLs across different language communities in crypto are gaining ground.
- One popular YouTuber, who provides such a service to Russian-speaking communities, is Gennady M. More than just teaching his community how to set up a trade and discussing key developments in the industry, Gennady always stands by to help his members whenever they have certain issues on the platform and even personally shares suggestions made by users with the exchange to improve user experience.
- Another increasingly popular YouTuber is MDX Crypto for an English-speaking audience. He streams nearly daily, speaking to about 2000 to 4000 viewers. MDX provides technical analysis for Bitcoin and major altcoins, but is also willing to do a quick study of tokens viewers are asking about. Having traded crypto since 2016 and traditional markets before that, MDX offers a well-rounded view that helps temper emotions in the community and get an objective sense of what’s happening on both a short and long term timeframe. For premium members, MDX provides a set of battle-tested indicators that can help traders as they seek to anticipate a sell-off or rally.
- For the Turkish community, Kripto Emre has been gaining popularity. He provides useful insight into how digital assets can be used to hedge against inflation and into price dynamics. He also teaches users how to set up solid trades with proper risk management.
In the case of all these YouTubers, and there are more like them, we can see the process of value-creation and confidence-building in the making. YouTubers offer their services for free to traders who simply want to get an edge in the market and also enjoy belonging to a community. If they prove to be good guides, providing quality content, they get more subscriptions, more likes and potential income from ads. But in addition, when we look at these community formations from a global perspective, and we combine it with the advocacy and capital brought into the market by the likes of Michael Saylor, Jack Dorsey and Cathy Wood, then we really get a sense of the energy driving the market this year.
The Power of Network Exponentials
The development of online crypto trading communities that usually form around influential YouTubers is something to keep an eye on. From YouTube itself to TikTok, we know network dynamics can be incredibly powerful and become a force to reckon with in politics. the economy and, of course, in crypto.
Bitcoin and other top tier cryptocurrencies are caught up in a cyclical bull market which when combined with the network power of social media, can be expected to give new meaning to the notion of exponential growth.
It is important, however, that investors in crypto keep an independent mind. Following more than one YouTuber can be one way to broaden your perspective and prevent yourself from getting hooked onto one single narrative. Markets are always evolving and so do narratives.
Formally joining a trading group which usually comes at a monthly fee, can certainly bolster your chances in the market if the type of discourse you’re exposed to is mature and there is enough analytical rigour in the channel. Before joining, you will need to learn more about how the community operates and what the background is of whoever is driving it, because while the protocols we love may be trustless, for now, the foundation for any successful exchange, crypto project or KOL is still, and likely to remain, trust.