Cryptocurrency in India is still quite in its developing stages. While it is gaining a bit more eminence with each passing day, it is still new in investment and trading opportunities available in the country.
Another very active and liquid market is the forex market, particularly for traders. Traders and investors are often interested to know how these markets compare. If you are looking to get started with cryptocurrency and forex trading in India, let’s look into the difference between cryptocurrency and forex and their similarities.
- Difference Between Cryptocurrency And Forex: Which Is More Profitable Explained – Detailed Comparison
Difference Between Cryptocurrency And Forex: Which Is More Profitable Explained – Detailed Comparison
The Foreign Exchange Market is the largest trading market globally. It is open 24 hours a day and 5 days a week with a daily volume of about $5.3 trillion. The forex market includes businesses, retail investors, banks, financial institutions, and everything that exchanges national currencies for doing business or making a profit.
Many factors can move the forex market, including inflation, unemployment, country-specific factors like GDP, etc. That’s why traders use an economic calendar to stay updated about the market’s information and economic events that might affect the market.
The cryptocurrency market was introduced in 2009. A vast ecosystem of digital trading assets soon formed with the opening of crypto trading exchanges and the rise of various altcoins. The Crypto market operates 24 hours a day and 7 days a week and has a daily volume of about $100 billion.
The trading regulations on crypto exchanges vary as different parts of the globe have different rules related to cryptos. Crypto markets are less affected by traditional financial markets or global economic events. Traders are more involved in paying attention to charts and analysis.
Let’s see some significant differences between cryptocurrency and forex. Let’s discuss the detailed comparison of the differences between cryptocurrency and forex.
Many participants make up the forex market. These range from investment funds, central and commercial banks, retail brokers, companies, and traders. Commercial banks are the main hub facilitating an exchange of currency pairs being traded internationally.
Central banks enter this market to stabilize the national currency exchange rate, which impacts the country’s economy. There are three types of participants in the cryptocurrency market: miners, exchanges, and trades. Miners are companies that complete blocks using cryptocurrencies.
Exchanges are digital marketplaces where you can sell and buy cryptocurrencies. Traders, on the other hand, Cryptocurrency postulate on the fall and rise of the price movement and don’t take ownership of the underlying crypto coins.
The forex market is big mainly because it’s composed of transactions from international entities such as banks, companies, investors, individuals, and funds, who hang on to this system to exchange foreign currencies in real time.
The cryptocurrency market has made huge strides as blockchain networks have expanded while still in their teen years. The global cryptocurrency market was valued at $1.5 billion in 2021 and is expected to reach $2.3 billion by 2028.
The cryptocurrency and forex market structures are mostly dependent on demand and supply and have a bearing on how traders can overcome the price without the approval of government agencies. Trading cryptos and forex can be done over the counter or through an exchange or brokerage.The market structure for both crypto and forex is also decentralized. No single party controls the market because a central authority like the government does not issuethem.
In the case of cryptos, some consider this transparency to be the strength of the market. Comparing the traditional currencies traded on the FX market, cryptos mainly exist only in the digital space and are stored on a blockchain. Cryptocurrency transactions only take place through digital wallets and are verified once mined.
Accessibility Of Asset
Compared to digital assets like cryptocurrency, the forex market provides more accessibility. You can trade over 80 exchange currency pairs available all over the world. It includes significant pairs like EUR/CHF, EUR/GBP, and AUD/USD. The minor pairs are CHF/JPY, CAD/JPY, and CAD/CHF.
The exotic currency pairs include EUR/CZK, EUR/HUF, and CHF/HUF. Most cryptos have less liquidity and require a wallet and an exchange account to trade, which can be expensive to maintain and have deposit limitations.
A limited number of foreign exchange currency pairs are available worldwide, and there are over 11,000 cryptocurrencies. In addition to the well-known ones like bitcoin, they are traded on the blockchain. This also makes it hard to track the cryptocurrency market.
Both crypto and forex markets are volatile. However, cryptocurrencies tend to experience more volatility than forex currency pairs. This means crypto prices are highly affected by even the smallest market movements, leading to significant fluctuations in a single trading session.
Whereas forex pairs have high daily trade volumes with frequent movements within narrow bands. Compared to other asset classes, the high volatility rate aside from cryptos attracts a lot of traders.
Understanding Difference Between Cryptocurrency And Forex Trading
As we see, both forex trading online and cryptocurrency trading in India have several points and differences. Here are some differences between cryptocurrency and forex.
|Cost of trading is lower||Cost of trading is higher|
|More stability||Higher volatility|
|High liquid||Less liquidity|
|Less common exponential trends||More common exponential trends|
|Good for day traders||Good for day traders|
Is Forex vs Crypto: Which is Better For Beginners
You should know the difference between cryptocurrency and forex markets that are not regulated by the same authority. The market is OTC (Over The Counter), which involves many transactions among several market participants, such as investment funds and central banks, and is highly regulated.
Brokers like us in the UK, who trade forex markets, are regulated by the Financial Conduct Authority (FCA). This industry works closely with the Bank of England to ensure that brokers promote and create an environment that places the interest of the traders ahead of their own.
Similarities Between Forex And Cryptocurrency
The difference between cryptocurrency and forex in India, both have some points and similarities between them. These similarities can help you better understand the two markets.
- Market forces like supply and demand determine the prices of both forex and commodities.
- Both forex trading and cryptocurrency trading require a good understanding of the respective markets.
- The trades in both markets are easy to execute, making them suitable for beginner trades as well.
- You can trade both forex and crypto online.
Forex Vs Crypto Trading Review
Quora review says while considering the difference between cryptocurrency and forex, Forex trading is more stable and skill-based than cryptocurrency trade. It takes more time, more initial information about trading, and sadly less profit than cryptocurrency trading.
- Firstly, the crypto market is relatively newer, while forex trading has been in practice for longer. We have different national currencies now.
- Cryptocurrency trading comes with a higher degree of risk than forex trading.
- The cryptocurrency market is not regulated as the forex market because the former is newer than the latter.
- You can open a trading account and get started in India.
FAQ of Difference Between Cryptocurrency And Forex
Is Forex Better Than Crypto?
Trading in crypto comes with a higher degree of risk than forex.
Is Forex And Crypto The Same?
Forex trading has been in practice for much longer, whereas the crypto market is newer.
Crypto Vs Forex Investment: Which Is Better?
The volatility of crypto markets is higher than that of foreign exchange ones.
Is Forex Similar To Cryptocurrency?
Cryptocurrency and Forex are two radically different asset classes.
Conclusion – Difference Between Cryptocurrency And Forex
Determining the difference between cryptocurrency and forex markets to trade forex crypto is a personal decision. But you will find online forex trading much easier to understand. Trading in foreign exchange and currencies can add much-needed diversification to your portfolio.