Cryptocurrency trading is a new market introduced for traders ever since new digital currencies popped up globally to compete with bitcoin. Crypto trading is often confused with forex trading as both the trades are done online and involve direct money. Even though both the trades involve trading currencies, there are a few differences between the two.
Forex trading is a well-established market, while cryptocurrency trading is a new market in the early decade. Forex may involve intermediaries, brokers, and banks to carry out the trade which offers better decisions to forex traders. On the other side, crypto trades do not have any middlemen yet and can be a disadvantage for the traders if they do not possess the right knowledge. Another benefit of forex is its high liquidity compared to the lack of liquidity in crypto. Let us look at the major differences between forex and crypto trading in detail.
Swiss Francs vs Bitcoin
Forex is the largest trading market in the world. It makes turnover for trillion on a daily basis. Compared to forex, crypto trades turnover has only been insignificant up until now with the maximum turnover to reach $1 billion. BTC trading has not even come close to just Swiss Francs trading, which is responsible for only 5% of the entire forex and has a daily turnover of over $250 billion. However, crypto trading can show better returns with up to 70% for the traders. Such a high percentage on the returns has never been possible in the forex market. Forex is also a well established and mature market. There are middlemen for forex everywhere who charge fees to provide the best trades for the investors. It can make forex a bit expensive even before the traders make their first profits. It means that you need a considerable amount of capital before you can expect major profits from the forex market. Crypto trades are free of middlemen and the involvement of institutions such as banks which make the trading much easier.
Stability and Volatility
Making profits in forex can be more difficult than crypto due to the high volatility in the crypto market. The prices for crypto can rise and fall at massive rates. It is a benefit for forex traders as they can avail the liquidity easily. A forex trader can invest in a high-low pair while being assured that the trade will not change massively. Crypto’s price can shift for big orders, especially when trading lesser-known coins. Crypto volatility also means that large swings in the profits are possible and can be common. It makes it easier to buy trade in the morning and sell in the evening at much higher rates than forex.