eToro Review: Copy the Cryptocurrency Trades the Pros Make

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eToro is a cryptocurrency trading platform, but it's more than just a place to buy and sell coins. It stands apart because it provides users the option to copy the trades of popular, featured investors. 

eToro hopes to add CopyTrading for stocks and ETFs to the mix, but for now the platform is focused on investing in cryptocurrency assets, which tend to be more volatile. Investors will need to be careful and do their own research, but will find eToro provides many educational tools to help with that process.

eToro is a cryptocurrency trading platform that also has a social investing component. Investors can buy any of 41 different cryptocurrencies on the platform. They can also copy the trades made by popular investors, or choose from crypto portfolios that offer a safer way to invest in virtual currencies.

How does eToro work?

Investors in eligible U.S. states can sign up and link a bank account to eToro to begin trading cryptocurrencies. After depositing a minimum of $50, investors can purchase any of 41 virtual currencies, with a $10 minimum investment. eToro charges a round-trip spread for cryptocurrency trades, with the amount set based on the specific currency. 

Who can invest with eToro? 

Cryptocurrency trading through eToro is available in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

You will need to verify your account by providing proof of your identity as well as proof of your address before you can begin trading. You must have a valid U.S. address, or a residential or business address of your next of kin.

eToro provides access to many different cryptocurrencies 

eToro doesn't just restrict you to buying the most popular coins such as Bitcoin and Ethereum. You have dozens of different choices of which cryptocurrencies to invest in including Cardano, ZCash, Polkadot and many more. This makes it easy to use one platform to build a diverse cryptocurrency portfolio. 

CopyTrading of popular investment portfolios

eToro offers several options that simplify the process of investing in cryptocurrency. You can use CopyTrader to find a featured trader and copy all of the trades they make. 

Or you can choose to invest in CopyPortfolios, which are a collection of diversified cryptocurrencies that are rebalanced regularly with the goal of optimizing gains. CopyPortfolios reduce your risk by investing in larger cryptocurrencies and aiming for double-digit annual returns over the long-term. You should be aware, though, that you will need to invest between $2,000 to $5,000, depending on the portfolio chosen, if you opt to use this investing approach. 

No management fees are charged for  

Although CopyPortfolios are ready-made portfolios that are fully managed, there are no management fees charged for investing in them. Since you don't have to pay management fees, your potential returns aren't diminished. You can also stop holding a CopyPortfolio at any time so there's no long-term commitment.

Cryptocurrency trading isn't available everywhere

If you live in Hawaii, Minnesota, Nevada, New York, Puerto Rico, or Tennessee, you will not be able to use eToro to trade cryptocurrencies. This means the app has a more limited reach than other competing crypto trading platforms. 

Most eToro users can't invest in stocks and ETFs using the platform

eToro offers stocks and ETF trades only in a beta mode and only to a limited number of users who have received invites. While the company indicates it is working to make ETF and stock trading more widely available, there's no definitive answer on when app users will be able to use the platform to build a diversified portfolio of different asset classes. 

CopyTrading and CopyPortfolios include cryptocurrencies only

Both CopyTrading and CopyPortfolios are focused on cryptocurrencies only. You cannot see what stocks or ETFs popular traders are buying and selling, and there's no ready-made portfolios you can invest in that include stocks or ETFs.

If you pick your own cryptocurrency mix, or copy the crypto investments of popular traders, your ability to make money will depend on the underlying performance of the currencies that you invest in. If the cryptos that you buy happen to perform well, you will make money. Returns can vary widely, however, depending on how successfully you select your investments.

CopyPortfolios aim to reduce the risk of crypto investing, but the goal is still to earn double-digit annual returns. There's no long-term data on eToro's website about the returns these portfolios have actually produced, though.

How do I increase with eToro? 

On eToro you invest in cryptocurrencies that you believe to have solid potential and profit when they increase in value.

How do I cash out with eToro? 

To withdraw money from eToro, start by using the Withdraw Funds tab in the left-hand menu of the app. Specify the amount to withdraw and complete an electronic withdrawal form, then select submit. Your withdrawn funds are returned to the account that you used to fund your eToro account, and you will need to use an ACH transfer to withdrawal profits. 

eToro vs traditional investing

eToro does not currently allow you to trade stocks and ETFs, although it plans to do so in the future. As of December 15, 2021, you can only trade cryptocurrencies with the platform. Cryptocurrencies tend to be much more volatile than stocks or ETFs and they do not have as long a track record of performance. Crypto investment can have a place in a diversified portfolio because this emerging asset class has a lot of upside potential -- but you should also have some less risky investments as well.

eToro received 4.7 out of 5 stars on the iOS App Store. While there are just six ratings, a recent user indicated it was "Easy to Use." The app also received 4.1 out of 5 stars on the Google Play Store, with more than 105,000 ratings.

However, not all customers were happy with the service eToro provided. One reviewer complained that they were unable to sell their cryptocurrency within 60 days of opening their account, referring to this business practice as "very suspect." Others described the app as convoluted and confusing, and called it the "worst app ever" due to the difficulty in withdrawing funds.

If you're interested in a crypto trading platform that has a social investing component, eToro can offer what you're looking for. But it's important to be aware that some users have had difficulty selling their investments and withdrawing funds. You also can't trade other asset classes besides crypto with eToro so if you're hoping for one platform that allows you to do everything, alternatives such as Robinhood could be a better bet.