Bitget Copy Trading Report: Almost Half Of Copy Traders Are Gen Z Users 

Key Takeaways:

• Gen Z users account for 44% of all copy trading operations, showcasing the highest interest in this trading method. Older crypto traders prefer to seek professional advice through copy trading.

• Among copy traders, 93% of those involved in futures trading and 82% involved in spot trading achieved profitability, with cumulative gains surpassing 74 million USDT.

• Copy trading reduces time spent on the exchange by 23%.

• Spot copy traders tend to hold orders for twice as long as futures traders, primarily engaging in medium to long-term trading.

• Western Europe accounts for the largest share with 31% of all copy trading users, while African users show the most interest in copy trading.

Copy trading has emerged as one of the most highly sought-after services within the retail trading industry. While having found considerable traction in traditional markets, its presence in the crypto area is still in its nascent stages, gradually gaining momentum.

The inception of copy trading can be traced back to the social trading practices prevalent during the early Internet era, where seasoned traders generously shared their trading strategies on forums. Later the boom was fuelled by the popularity and success of Reddit traders. Copy trading only streamlined that approach with technology, allowing new traders to execute the trades of experts instantly.

Although the practical application of tools such as ChatGPT currently falls short of achieving absolute precision and reliability, there is a growing recognition of the significance of automated solutions that integrate human intelligence. Copy trading, as a prime example, is witnessing a surge in popularity within the crypto market, underscoring the pressing need to simplify this intricate process, particularly for individuals new to the realm of trading.

What Is Copy Trading?

The concept of copy trading involves investors replicating or mirroring the trading activities of professional traders to adopt the same positions as the experts they are copying. This approach offers a convenient and user-friendly method for investors to participate in the financial markets, as transactions can be executed automatically and instantaneously.

Copy trading primarily caters to short-term trading strategies, with a particular focus on day trading and swing trading. By engaging in copy trading, investors can leverage the resources and expertise of experienced traders, including their insights, trading experience, research, and risk management strategies. This allows novice traders to benefit from the knowledge and skills of established professionals, potentially enhancing their trading outcomes.

Copy Traders Favor Derivatives Market Over Spot for Trading

The study conducted by Bitget encompassed a comprehensive analysis of active crypto users on the platform who engaged in trading operations throughout the year 2023.

Copy trading in the derivatives market remained more prevalent compared to its counterpart in the spot market. Specifically, futures trading accounted for 91% of all copy trading transactions, with spot comprising the remaining 9%. The growth of the crypto derivatives market share in 2023 has pushed the demand for innovative instruments such as automation tools and AI algorithms to enhance the trading experience. According to CCData, in April, cryptocurrency derivatives trading volume on centralized exchanges reached a new all-time high, while the market share of crypto derivatives trading rose to a record 77.6%. In June, derivatives trading volume on CEXs increased by MoM of 13.7% to $2.13 trillion.

It is worth noting that new users in 2023 exhibited a stronger inclination towards copy trading compared to those trading back in 2022. The growing trend for copy trading tools can be traced back to the traditional investment market, where novice traders traditionally entrusted their money to experienced brokers with proven reputations. Users may feel more comfortable knowing that their investments are being managed by experienced individuals who can analyze market trends and make informed decisions. Human traders can also adapt to changing market conditions and employ strategies that may not be easily programmable into bots. Additionally, human traders can provide personalized insights, advice, and communication, which can enhance the overall trading experience for users.

Although this statistical trend is visibly pronounced, it is important to acknowledge that the Bitget copy trading feature for spot trading was only introduced at the beginning of the year. Consequently, further data collection and analysis will be necessary to obtain comprehensive quantitative indicators regarding the adoption of copy trading among newcomers in late 2022 and early 2023.

93% Of Futures Copy Traders Are Profitable

According to 2023 H1 Copy Trading Earnings Report, in the first half of 2023, over 109,000 followers experienced profitable returns from their participation in copy trading, showcasing the effectiveness and widespread adoption of this trading approach. An impressive 93% of users employing copy strategies for futures trading in this period achieved profits, while spot copy users saw a success rate of 82%. The total number of profitable trades executed through copy trading has exceeded 16 million. In terms of financial gains, the cumulative profits from copy trading have surpassed 74 million USDT, reflecting the increasing interest and engagement with this trading method within the crypto market.

Among the diverse range of trading assets, Bitcoin (BTC) emerged as the most popular choice among traders, garnering the preference of approximately one-third of all users. The majority of successful copy traders in the derivatives market preferred mainstream coins, while spot copy traders gained more from new listings.

For trading derivatives, copy traders predominantly chose BTC, accounting for over 52% of their selections. Ethereum (ETH) followed in second place, comprising 44% of copy traders' derivatives picks. In the spot copy trading market, BTC and ETH's dominance faces competition from layer-2-focused tokens like ARB and MATIC. Bitget's native token BGB secured the third spot for spot trading volume.

Copy Traders Spend By 23% Less Time On Exchanges

The adoption of copy trading has demonstrated several advantages, particularly in enhancing the loyalty and knowledge of new cryptocurrency users. By reducing the barriers to entry, particularly in the realm of short trading, which is traditionally perceived as the domain of professionals, copy trading facilitates increased participation in the market. Additionally, it serves as a means to mitigate stress and minimize the risk of financial losses resulting from mistakes or lack of experience. Subsequent operations conducted by copy traders reveal a noticeable increase, further substantiating these benefits.

Notably, among new users in 2023, there was a surge in the number of deposits made during the first six months of the year, predominantly driven by those who actively engaged in copy trading and the improving performance of BTC. Furthermore, the average time spent on the exchange by copy traders was found to be 23% lower compared to users who traded independently, indicating a more streamlined and efficient trading experience for those utilizing copy trading strategies. In particular, copy traders engaged in futures trading spent less time than those engaged in spot trading, opting for intraday trading.

Half of Copy Traders Are Gen Z Users

Geographically, the exchange's copy traders are primarily located in Western Europe, East Asia, and Southeast Asia. Among these regions, Western Europe accounts for the largest share with 31% of all copy trading users, followed closely by East Asia at 26%, and Southeast Asia at 19%. However, when analyzing users in which markets show the greatest interest in copy trading, it paints an interesting picture.

Although African users account for a small proportion, they exhibit the highest levels of interest, followed by CIS and Western Europe and East Asia. This trend can be attributed to the emerging nature of crypto markets in Africa and CIS, where users are often less experienced and more inclined to use copy trading as a starting point, indicating significant potential. Additionally, copy trading is widely accepted in various Asian regions, further contributing to its popularity and adoption.

Analysis of user demographics highlights the varying demand for copy trading strategies across different age groups. Users under 25 years old exhibit the highest demand, representing 44% of the user base, followed by the 25-35 age group at 32%. Those aged 35-55 account for 17% of users, while individuals over 55 make up 7%. The younger generation, particularly Generation Z, displays a greater interest in innovation and a propensity to share experiences with peers on social media platforms, potentially explaining their inclination towards adopting copy-trading strategies. Moreover, young individuals often seek out social media influencers who serve as role models in lifestyle, knowledge, and investment decisions.

The Fidelity Investments 2022 Investor Insights Study reveals that 56% of Generation Z and Millennials turn to social media influencers for investment advice, while a survey by Fool, conducted a year earlier, found that 91% of Generation Z respondents rely on social media as their primary source of investing information. When selecting professional traders to copy, users pay close attention to the trader's rating, financial performance, and choice of investment products.

It is worth noting that, although there are fewer older copy traders, their interest in copy trading is high — second only to Generation Z traders under 25. Specifically, 72% of traders under 25 indicated an interest in Bitget's copy trading platform, which is also the main reason they use Bitget. At the same time, this proportion reached 65% in the 55-64 age group. The younger generation has a high acceptance of copy trading, mainly because they are interested in exploring different crypto investment options. But for older users, if they become interested in crypto investing, they also want to leverage professional trader advice and strategies through copy trading to help them get started more easily.

Futures Copy Traders Opt For Shorter Subscriptions

Analyzing the behavior of traders in different markets, it was found that spot traders held orders for a longer time, mostly choosing medium to long-term trading strategies. On the other hand, futures copy traders tend to hold futures orders for shorter durations, typically around one day, focusing on intraday high-frequency trading. Spot orders, on the other hand, are usually held for 2-3 days, primarily for medium to long-term trading.

Based on the data collected, it was observed that among followers who profit from futures copy trading, around 70% follow more than 7 elite traders on average. This suggests that they actively sought out multiple sources of trading expertise to maximize their returns in futures trading. The top gainer in futures copy trading follows 27 elite traders with total profits of over 140,000 USDT.

When it comes to the profitable chance, on average nearly 80% of elite traders have over 60% win rate. Additionally, close to 50% of elite traders realize profits of over 1000 USDT in elite trades. In spot copy trading, the majority of users choose to follow elite traders who have over 60% win rates.

Overall, the data highlights the different strategies employed by users who achieved significant earnings in futures and spot copy trading. While spot traders focused on following a smaller number of elite traders with higher order values and win rates, futures traders opted for a more diverse portfolio by following multiple elite spot traders. Spot traders favor medium to long-term strategies, holding orders for 2-3 days, while futures copy traders opt for intraday high-frequency trading.

Transparency and Social Aspect Drive Popularity in Copy Trading

Research has shown that the demand for copy trading solutions is strongly influenced by the social aspect, which is experiencing significant growth in tandem with the evolution of Web3 technologies and the increasing influence of social media on personal and financial lives, particularly among Generation Z users. This trend is exemplified by the surge in popularity of investment threads on platforms like Reddit, where a community of 371,000 individuals actively engage in discussions about their buying and selling activities. Similarly, dedicated Twitter Spaces can effortlessly bring together thousands of users, creating a rapidly-growing ecosystem of shared investment signals and insights.

The rising interest in copy trading among younger users is particularly evident in their engagement with non-fungible tokens (NFTs) and meme coins. Many of these users rely heavily on signals obtained from platforms such as Twitter, shaping their trading decisions. This shift highlights the increasing influence of social media platforms as a source of investment information and reinforces the importance of the social aspect in driving the adoption of copy trading.

By leveraging the power of social media and online communities, copy trading not only simplifies the trading process but also significantly reduces the time required for learning, analysing, and executing professional trading strategies. In the past, individuals interested in trading would have had to rely on traditional sources such as newspapers and tip sheets to study market or company performance. With copy trading, they can swiftly replicate the trades of proven experts, supported by transparent risk management practices and a deep investor community.

Overall, the integration of Web3 technologies, the growing influence of social media platforms, and the participation of Generation Z users in investment discussions have created a fertile environment for the expansion of copy-trading solutions, emphasizing the vital role of the social aspect in shaping the demand for such tools.

Further perspectives

The copy trading industry is poised for significant growth in the coming years, driven by several factors. Firstly, the increasing number of new cryptocurrency users entering the market is expected to fuel the demand for copy trading services. These users, often inexperienced in trading, seek reliable and efficient tools that can provide quick and easy access to the financial markets.

The growing demand for a social aspect in trading is also contributing to the growth of the copy trading industry. Traders are increasingly seeking platforms that offer not only the ability to replicate expert trades but also foster a sense of community and enable interaction among users.

Additionally, the evolving nature of the crypto market, characterized by frequent changes and uncertainty, is expected to drive the demand for copy trading as a means to navigate the market's volatility and mitigate risk by following the strategies of proven experts.

According to a report by The Insight Partners, the social trading industry is projected to grow at a compounded annual rate of 7.8%, reaching a market size of $3.77 billion by 2028. The market size of the industry stood at $2.2 billion at the end of 2021, indicating significant growth potential in the years ahead.