Forex Vs Bitcoin – What do we Suggest? Read to Know

The foreign currency exchange (Forex) and cryptocurrency are two separate markets. These markets have their own distinct features and are influenced by varying market conditions.

The Forex is the world’s biggest market where a wide range of currency pairs such as EUR/USD, EUR/GBP, and USD/JPY are traded. As a global market with the highest liquidity, forex is decentralized, while the currencies in Forex are regulated by centralized institutions. Thus, the Forex market is influenced by numerous economic and political events including inflation, job reports, etc.

On the other hand, Bitcoin is a digital currency representing a single coin in the cryptocurrency market. Unlike, other currencies like the US dollar or Japanese yen, Bitcoin is not regulated by any centralized government. They are hosted online and are maintained by a special peer-to-peer network that prevents their usage more than once.

Key Differences between Forex and Bitcoin

1. Liquidity:

Liquidity is the ease with which an asset can be converted into ready cash without impacting its market value. In Forex, liquidity is very high. Therefore, trading even a large volume of currencies is quick and easy. 

While for Bitcoin liquidity is very low. This is because it has not yet gained the status as a universally accepted currency. Buying things with Bitcoin is not as easy as buying them with money from your bank account. 

2. Volatility: 

The limited Bitcoin supply makes it more vulnerable to volatility. Even the Forex market is not immune to wild fluctuations. Both Forex and Bitcoin are subject to experience high and low in a short duration. But when compared, Bitcoin fluctuations are more significant. Sometimes, it can move up to hundreds or thousands of dollars in a single trading session.

3. Supply: 

As Forex is the world’s biggest market, it has an unlimited supply of currencies available to trade. 

In contrast, Bitcoin has a limited supply. With finite supply, the value of Bitcoin goes on increasing considerably. As such, it offers massive potential for gains. 

So which is better: Forex Vs Bitcoin?

There is no definite answer to this question. Both of these markets have their own risk and opportunities. So rather than trying to pick one over the other, figure out which investment is better and safer as per your goals. Whether you trade Bitcoin or foreign currency both will require high-level engagement from your side. Risk management, planning, perseverance is all required to make your trades successful. But, undoubtedly, trading in either of these markets can open up a host of opportunities for you as an investor.  

What you should know before trading forex or bitcoins

Trading Bitcoin or Forex should only be undertaken by traders who are aware of inherent risks. However, given below are a few suggestions that can help minimize your risk exposure.

  • All forms of trading involve some amount of risk. So before entering the market make sure to prepare a viable risk management strategy.
  • A trading plan can limit your exposure to risks. It will help you keep your tasks on time while trading.
  • Choose the right crypto exchange app (Android and iOS). This is important to minimize your hassles down the way.

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