Forex vs Crypto Trading • Understanding the Differences • Benzinga

At its core, any comparison between the forex market and the cryptocurrency market boils down to old and new ways of thinking about money. It may seem difficult to map the currencies supported by a country to currencies using encoding. But people create real purchasing power in their daily lives by learning about both types.

If you have ever had thoughts about forex and crypto in your head, read on for a bit of background that might help you make a decision.

Similarities of Forex and Crypto

Before discussing the differences between crypto and forex, let’s see why these markets are not so different from each other.

Forex and crypto play together

The most important similarity between cryptocurrency and forex is that they now have a relative value to each other. You may not believe in Bitcoin or Ripple as legal currency, but currency exchanges do. The Chicago Board Options Exchange (CBOE) also believes enough in crypto to offer option contracts on it.

While the CBOE only offered crypto futures from December 2017 to March 2019, the Chicago Mercantile Exchange (CME) currently offers bitcoin futures. You can also trade Contracts for Differences (CFDs) on well-known cryptocurrencies on platforms like eToro, just like CFDs on forex currency pairs.

Since cryptocurrencies and foreign currencies fluctuate the same way, you can think of all investments in the same way. Yes, you need to use different strategies and study different indicators in order to make the right decisions, but these financial instruments are not opposites.


If you have read anything about cryptography, you have heard of the concept of “decentralization”. All this means that there is no centralized regulation in the market. Here’s a little secret: the forex market is also decentralized. No, is not a central forex regulator, but just an aptly named exchange! (Click here to view the review to learn more.)

Decentralization by itself does not mean that the market is less stable. This means that you have to be careful when investing, but it goes without saying.

Similar market physics

The same basic physics of money that governs forex movement also governs cryptocurrency. There is a concept of basic supply and demand: if there are more buyers for a cryptocurrency than sellers, the price of this coin usually rises. More sellers than buyers means a cryptocurrency bear market, just like in forex.

Efficient news absorption by the market means that forex and cryptocurrencies respond instantly to market turmoil. For example, if a BTC kit converts $30 million worth of BTC into Japanese yen, it will affect the cryptocurrency market in the same way that talk of war in the White House would change the value of some forex currency pairs in the US.

Differences between Forex and Crypto

The differences between the markets will ultimately tell you which one you prefer to invest in. Yes, you can invest in both, but the average investor often chooses one or the other as their starting point. When you get your feet wet, you may discover other markets that you didn’t fully understand when you started investing.

Watch out for these differences.

Market Size

The forex market is the #1 market in the world in terms of trading volume with large margins. As of May 2020, the cumulative market capitalization of the crypto market was approximately $256 billion. The Bank for International Settlements also reported an average daily value in the foreign exchange market of $7.5 trillion in April 2022.

The large size of the forex market also gives it varying levels of volatility and liquidity (concepts to be discussed below). Forex beginners can start trading currency pairs with stablecoins with more protection against big losses before moving on to more speculative trades.

Keep in mind that currency pairs may seem simple when introduced by industry experts, but they are new to you. Because the market is so big, you can easily start with a simple pooling, learn what to do, and gradually expand your portfolio without running into anything that seems too complicated.

Volatility and liquidity

Cryptocurrency is a smaller market than forex, so small amounts of money can move crypto more significantly than forex. If another $256 billion entered the cryptocurrency market, we could ideally expect the prices of all cryptocurrencies to double. The same $256 billion represents a deviation of about 4% in the foreign exchange market. As a result, the cryptocurrency market is much more volatile than the forex market.

Higher volatility means more risk for investors – more chances for exponential growth as well as huge financial losses. Higher volatility also means less liquidity (easier to trade) as the free market naturally attracts more people. Low volatility and high liquidity mean that the forex market can better absorb economic shocks. This benefits the average person – investor and non-investor alike – with relatively stable currencies even during times of economic crisis.

At the same time, an experienced investor can succeed in the crypto market if they do their research and know when to buy and sell.


Cryptocurrency initially took off primarily due to its ability to facilitate anonymous transactions. Government intervention has limited the ability of major coins like Bitcoin and Ethereum to hide identity, but smaller coins like Monero, Zcash and Verge retain this feature.

Forex transactions, on the other hand, are regulated by a close network of Forex brokers and financial professionals known as the interbank market. Since 2014, the interbank market has implemented the Know Your Customer (KYC) standard, which requires merchants to provide personal information to access an exchange. Possibly spurred on by the anonymous structure of crypto, companies like EagleFX that undermine or ignore KYC regulations are showing up among forex traders.

Advantages and disadvantages of crypto trading

Before deciding to invest in this rapidly changing environment, consider the following pros and cons. Comparing these lists will help you understand how big the downsides of a cryptocurrency can be. Invest in crypto when you feel the pros outweigh the cons. Otherwise, you can choose a more stable investment vehicle.

Advantages Disadvantages Anonymity
Strong growth potential
Low barriers to entry
Low fees
Increase acceptance in society at large Lack of government guarantees for bills
Less secure market
Total probability of default in currency
Lower levels of liquidity
Mistakes in underlying technology can significantly impact markets

Advantages and disadvantages of Forex trading

At first glance, forex is safer than cryptocurrencies, but you still need to know what you are getting into. Compare the pros and cons of the two options to determine if the cons outweigh the pros in your opinion. Since it is your money and your wallet, you can do what is best for you at the moment.

Advantages Disadvantages Stability
High liquidity
Centralized measure to protect against fraud and theft
Less potential for mass casualties
KYC standards protect traders and brokers from fraud Less potential for huge short-term profits
Revenues are easy to track and apply
Higher barriers to entry
High commission and intermediary fees depending on the chosen broker
Unexpected political events can shock the market and lead to big losses

Best Forex Brokers

The broker you use to trade Forex can make a huge difference to your success. Here are some of the best forex platforms to consider.

  • iToro USA LLC; The investment is subject to market risk, including possible loss of principal.

Best Brokers for Cryptocurrency Trading

You can avoid some risk by trading cryptocurrencies with the right broker. Take a look at some of the most reputable and popular options.

  • This ad promotes virtual cryptocurrency investment in the EU (by eToro Europe Ltd. and eToro UK Ltd.) and the US (by eToro USA LLC); which is highly volatile, unregulated in most EU countries, not protected by the EU, and not controlled by the EU regulatory framework. The investment is subject to market risk, including loss of principal.

Which market suits you?

The forex and crypto markets share characteristics, but they couldn’t have more different risk reward dynamics. If you want a free, liquid market that rewards patience, forex might be your game. If you’re looking for pure growth, you can look into cryptocurrencies. Consider talking to a financial advisor about forex vs cryptocurrency and never speculate in the market with money you are not prepared to lose.

Frequently asked Questions


What is more profitable, crypto or forex?


It’s not about profitability, it’s about liquidity and volatility when it comes to cryptocurrencies and forex. Forex can offer more liquidity while cryptocurrencies are known to be more volatile, which could mean higher returns with higher risk.


Is it possible to lose money on bitcoins?


Of course you can. Whenever you invest in the markets, you have the opportunity to lose just as much as you have the opportunity to earn.

Related content:

  • GEMINI ALTERNATIVES. Large trading platforms such as Gemini are the best option for many users.
  • 3COMMAS REVIEW is a crypto trading platform offering tools for beginners and experts.

Not all news on the site expresses the opinion of the site, but we convey this news automatically and translate them using software technologies on the site, and not from a human editor.

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