Cryptocurrency trading and Forex: The thin line difference

cryptocurrency vs forex

Cryptocurrency trading and Forex: The thin line difference

Background Forces/Technology

Cryptocurrency is a decentralized digital money, independent of any government or institution built on the blockchain, while the major players in the forex market are central and commercial banks.

The Blockchain is a transparent technology on which most digital currencies are built on. It is devoid of government and centralized interference. This technology is foolproof as against the bureaucratic and easily manipulable centralized systems.

Currency Pairs

Bitcoin is one of the first type of cryptocurrency in the market, but at the moment the cryptomarket is flooded with a wide variety of digital currencies. At the beginning of its existence Bitcoin was worth a few cents, but has recently reached a worth of over 6 thousand dollars for one coin (current price as at October 2018), so in the longer term Bitcoin is more volatile than typical currency pairs (especially major ones such as EUR/USD or GBP/USD). It is said that Bitcoin is a virtual gold.

Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCC), Litecoin (LTC), Game Credits (GAME), Dash (DASH) are some of the popular types of cryptocurrency. These currencies are traded in pairs. The world’s popular Fiat currencies available on Forex markets include US Dollar (USD/$), Great Britain Pounds (GBP/£), European Union Euro (EUR/€), Japanese Yen (YEN/¥) etc.

However, with new developments, some platforms allow hedging of cryptocurrency with Fiat currencies and vice versa to protect clients from adverse volatility. It’s a smart risk taking strategy.

Market Operation

There’s also a difference between Cryptocurrency exchanges vs forex markets. Bitcoin and its cohorts work for 7 days a week, 24 hours round the clock. The forex market is open just for 24 hours a day, between Monday and Friday. While during weekends, as well as during important holidays, the Forex market is resting.

Price Factors

Each cryptocurrency has a limited amount of supply, this goes a long way in determining the market price. If someone is keen on buying Bitcoin quickly, he will issue an order for a higher price than other pending orders. In this way, the price of digital currency is rising. It falls when the seller decreases the price dynamically or successively.

READ  5 Ways You Can Invest Wisely In Bitcoin

Conversely, the behavior of exchange rates available on the forex market can be influenced by different events (political, social, economic, etc.). Macroeconomic data publication such as GDP growth, monetary policy or central bank reports has the greatest impact on the high volatility of this market. The variability of course rates is much more dynamic here than in Bitcoin case.

Final Words

It would interest you to know that a background knowledge of Forex would suffice in Cryptocurrency trading when the underlying differences are taken into consideration.

However, if you don’t have experience or knowledge in both terrains, don’t be discouraged. 9jacashflow.com offers training courses that can turn a novice to a professional in the shortest possible time, facilitated by the best of hands in the industry

We look forward to hearing from you!

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