The forex market is one of the largest and most active markets today. It’s also one of the top trades around the world. This financial market has been a go-to for various kinds of traders and investors and it’s no surprise why! This market is one of the most prosperous, relevant and liquid financial markets today.
Another financial market worth mentioning is the cryptocurrency market. This financial market has been one of the popular ones today because of the massive price boom of successful cryptocurrencies like Bitcoin, Ethereum, Litecoin and many more.
Both of these markets are often compared and even thought to be the “same thing.” And yes, they share some similarities but both also have very distinct differences. To know the relationship of these two, below is an overview of their relationship:
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Their market participants: (Forex vs. Cryptocurrency)
To start off, one of the main differences these two trades have is their market participants. Market participants play a huge role when trading–these are the individuals, entities or institutions that engage in the buy and sell of financial assets. To know the market participants of both forex and crypto markets, here’s a rundown:
Who are the market participants of Forex trading?
Considering this is the largest financial market around the globe, expect its participants to be one of the big boys in the game. This market exchanges fiat currency like USD, EUR, JPY and many more! Its participants are central banks, companies, financial institutions as well as retail traders.
Who are the market participants of Cryptocurrency trading?
This financial market is on the digital side of trading and trades virtual currencies like Bitcoin, Ethereum and many more altcoins. Its market participants are institutional investors and retail traders.
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Asset types: (Forex vs. Cryptocurrency)
Assets are valuable economic resources that can be controlled or owned by different people, groups, or institutions. These assets can take many different forms, and depending on their qualities and traits, they are usually divided into several groups. So for forex and crypto, check them out below:
What are the asset classes of Forex Trading?
This financial market deals with fiat currency that is issued by central banks and governments.
What are the asset classes of Cryptocurrency?
For this financial market, since this deals with decentralised digital assets, this heavily relies on blockchain technology. So in a nutshell, asset classes under crypto are not issued nor are they regulated by any central authority.
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Level of volatility: (Forex vs. Cryptocurrency)
Volatility is a statistical indicator of the variability or dispersion of returns for a particular investment, market index, or financial instrument over a specified time frame. It quantifies the degree of fluctuation in an asset’s price or value and is frequently used to gauge the risk involved with an investment. And for forex and crypto, here they are below:
What is the level of volatility involved in Forex trading?
Forex is a market that is safer for conventional trading and investing. Simply because major fiat currency pairings are typically thought to be less volatile than cryptocurrencies.
What is the level of volatility involved in Cryptocurrency trading?
Due to the extreme volatility of cryptocurrencies, there can be huge price movements in a short period of time. For traders and investors, this volatility can bring both possibilities and threats.
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Market hours: (Forex vs. Cryptocurrency)
Financial markets have established operating and trading hours, which might change based on the type of market, the location of the market, and the assets being exchanged. So for you to know how and when the forex and crypto market operate, here’s a rundown:
What are the market hours of Forex trading?
As stated above, the forex market is considered to be one of the most active markets around the world. This financial market operates 24 hours a day, five days a week. It typically begins in Asia and then gradually moves across the globe through the opening of financial centres.
What are the market hours of Cryptocurrency trading?
If forex runs 24 hours 5 days a week, then crypto runs 24/7! This financial market operates 24 hours, seven days a week so there are no weekends or holidays for this market. This market is ideal for traders who are looking for round-the-clock trades to get into.
Take away
These are just some of the few things that interconnect and differentiate forex trading and cryptocurrency trading. So if you’ve ever wondered how to trade forex effectively, why not also try crypto? This will diversify your portfolio as a trader and open your doors to more opportunities to profit.
