The convergence of Forex and crypto has a high potential given that they are both currencies. This is particularly useful in transferring funds across countries.
Foreign exchange traders and crypto holders come from very different breeds of investors, poles apart in their respective takes on trading or investment. Both Forex and cryptocurrency are potent asset classes to lock your savings in, but how much and to what extent is what we’re focused on.
Traditionally there are securities like equity, bond, and shares, derivative instruments, cash instruments, and foreign exchange to fill up the textbooks on asset classes. The cryptocurrency that evolved purely out of higher mathematics and advanced cryptography paid no heed to the rule book of commerce. This was much the emergence of the fourth dimension. Naturally, there has been a suspicious, slighting, and dismissive attitude surrounding the trajectory of the nascent crypto. This, while the traditional asset classes enjoyed mass respect from the owing to the wealth gained by dedicated and chance investors. Average investors, however, stuck to maintaining savings in a bank after affording a decent home.
Those traders that are into Forex trade argue that foreign exchange trade is successfully driven by knowledge and in-depth understanding. Also, the fluctuations among the reigning fiats are way more predictable than other tradable instruments.
Major fluctuations do not affect reigning sovereign currencies like USD, GBP, YEN, EUR, or other real-world currencies because the economy would fall worldwide. It is no rocket science that physical currencies are always in demand translates as more security. On Forex, you also find the option to try your luck first, thanks to the demo accounts that are available for everybody.
Deposit insurance is yet another advantageous feature in Forex. This serves to safeguard the money in your account.
However, a major disadvantage of Forex is that it is susceptible to inflation. Inflation, as we know, may strike any country. There exist possibilities of suffering huge losses to the effect that you may even lose your account. The upside is: there is little to no chance of losing your money at the drop of a hat. This means it is almost certain that you will not lose your money overnight.
Crypto with a number of similarities with Foreign lacks the concrete backing of a nation’s reserves in gold and other foreign currencies. This foundation drives the value of the currency. Crypto on the other hand is driven by market demand, quotes, and opinions of notable investors and very often by the social media current.
It is worth mention here that Bitcoin, the foremost crypto has risen as much as 400% in a year. This year, in particular, Bitcoin has scaled exponentially before etching sawtooth with frequent dives.
This makes it the most unpredictable asset to invest in. However, considering its trajectory over the past 11 years of existence it has scaled higher than it has dipped. The high returns associated with crypto come with anxiety stemming from the devastating volatility of the asset.
Forex and Crypto
The convergence of Forex and crypto has a high potential given that they are both currencies. This is particularly useful in transferring funds across countries. Identifying the scope of profit, many Forex broker firms have rushed to integrate crypto exchanges in their website and many others are in the process.
The combination of Forex and Crypto has as much utility to it as the profit value to it. Its benefit pertains more to Forex broker sites than to individual investors.
Individual investors keen on foreign exchange and crypto need to maintain a balance and restrain the ‘greed’ factor.
Forex and crypto are individually powerful asset classes and have a high probability of good returns on longtime lock-in. However, in combination, they become more powerful as an instrument serving global purposes and solving real-world challenges.