Bitcoin and forex trading is very popular among investors and traders nowadays. Bitcoin has developed into an extraordinary speculative investment. It is capable of offering lavish returns.
Among other cryptocurrencies, bitcoin is the most traded and the most interesting option for traders given its volatility. It is managed to attract the desire of many forex brokers and is widely available for trading as the BTC/USD currency pair.
Bitcoin and Forex Trading
Generally, bitcoin can be used in the forex market. There are two ways of using it. First, it is used as one of the currency pairs. Second, it is used as a fund for a trading account. Bitcoin trading as part of BTC/USD (in the form of a currency pair) is almost similar to conventional currency pairs traded in the forex market.
In the same way, transactions for selling and buying, take profit, stop loss are placed. However, there is one thing that distinguishes bitcoin from traditional currencies. It has intrinsic features and has been around for quite a time.
Bitcoin and Forex Trading in Contrast
Bitcoins are made through mining and there is no alternative for a controlled supply. The possibility of a supply that suddenly increases which would lower its value, is eliminated by this.
In contrast the uncertainty supply emanating from the central bank is used to create fiat currencies. Additionally, there is a limitation of bitcoin supply (only 21 million). The value is tied to the fundamentals in the crypto market.
It is in contrast with forex that being traded in the best forex broker related to a specific economy, country, or central bank. It is different from the currency that can be greatly affected by a shift in monetary policy.
Nonetheless, paper contracts and derivatives around bitcoin are limited. New contracts are created by a number of brokers, allowing bitcoin margins to be purchased by investors. However, such contracts are very limited.
Conversely, the OTC (over the counter) can be beneficial for currency traders. Increase and contracts the leverage by making use of the extensive list of contracts.
Lastly, the next contrast between forex that is traded in a reliable broker like Didimax forex broker, and bitcoin is the issue of liquidity. Currently, the estimation of bitcoin’s market cap is at $650 billion. Fores is a $6 trillion market.
Naturally, this implies that the liquidity of forex is higher than bitcoin. Bitcoin trading is subject to a volatile trading environment.
Cryptocurrency Exchanges vs Forex Brokers
Bitcoin and Forex Trading is offered by many brokers. However, CFDs (contract for difference) are limited by them. Especially in the US which does not allow CFDs. The country should be aware of the possibility of legal implications.
Also, given that bitcoin-based is not the criteria of the trusted platforms of forex trading, they will most likely conduct trade using traditional cryptocurrency exchanges. Further, the question is rising of whether the broker does others then allow bitcoin trade using existing crypto exchanges?
Given this point, using cryptocurrency exchange to trade bitcoin is more beneficial. At least, waiting for the broker offers a more prosperous offering of their bitcoin. However, remember that crypto exchanges are not always offered cheap trades.
Coinbase is an example. It is the most known crypto around the US. Traders can be charged by Coinbase up to 3 different fees on a single trade. In terms of fees, compared to eToro, eToro is cheaper.
However, BInance.US which is another crypto exchange is cheaper compared to almost any broker. Trading currency can be accompanied by market traps that make traders fail.
A good strategy and cooperation with an experienced broker like Didimax can be a great solution. We are a licensed broker that will be always there to help you in understanding bitcoin and forex trading, and some other trading instruments.
