Today, the capitalization of the cryptocurrency market is approximately $900 billion. With regard to Forex, we can say the following: back in 2019, the market value was $2409 trillion.
It’s hard to compare these two numbers without taking a closer look at these 2 iconic areas of the finance industry.
We all miss the old days, when the cryptocurrency market showed rapid growth, and we live in hope for a quick return of the past. We also remember the unceasing conversations about the advantages of a decentralized market and that cryptocurrencies in the near future will replace the real money we are used to, and cryptocurrency trading as an opportunity to quickly increase our wealth.
So which is better, Crypto Trading or Forex?
In these two areas, cryptocurrency trading and forex, we see many similarities, but also a number of differences.
While trading on Forex, a trader chooses a currency pair to carry out a transaction to exchange the first currency for the second in the expectation that the second will grow in relation to the first. In case of a successful outcome, the trader returns the initial investment and additionally receives profit from the remuneration for the transaction.
Just like Forex, cryptocurrency trading also contains currency pairs such as BTC/USDT; ETH/USDT. But essentially it also implies a kind of simple speculative activity.
The similarity of these two seemingly different types of trade is primarily that the pricing policy in these areas equally depends on the laws of supply and demand. However, the supply and demand variables for cryptocurrencies are significantly different from those affecting the market of traditional currencies.
Factors affecting the crypto market
At the inception stage, cryptocurrency exchanges did not impress with their scale, but with the development of the crypto industry, these insignificant trading platforms have grown into giants providing access to many different digital currencies.
Also, in the initial development of digital assets, the ability to store on behalf of the other party was an extremely difficult process and almost impossible. One of the companies that found solutions was MicroStrategy (MSTR), which provided such an opportunity to various organizations that showed an interest in using digital assets in their financial strategies.
The main difference between these two ways of trading, crypto trading and forex, primarily lies in the degree of risk. Trading digital currencies is traditionally considered riskier than traditional currency trading due to its volatility.
Both cryptocurrency trading and forex trading offer their users the opportunity to trade with leverage. But do not forget that the crypto market is very dynamically volatile, so the use of leverage can have a more negative effect on the outcome of a transaction than in a similar situation in the forex market.
With forex it looks different, due to price fluctuations in the traditional foreign exchange market, traders are able to provide a larger amount of liquidity, which makes transactions much safer. The daily volume of currency trading in the forex market is approximately $6.5 trillion.
In conclusion, one thing can be said that there is no unambiguous and clear answer, which is better. For beginner traders, learning these types of trading, crypto and forex will be interesting but equally difficult.
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