Forex VS Crypto: Which One Should You Choose?


Crypto presents itself as a new way to think about money. It has gained rapid popularity and has brought significant disruptions into the world of finance. But the market for trading traditional fiat currencies – the forex market –  is still strong. As an investor, is crypto like forex? What should you choose to invest in?

What is Forex Trading?

Exchanging one currency for another is known as forex trading. This can be done for many reasons, such as import-export, tourism and investments. It is a massive and active market, which can be daunting for new retail investors to enter. However, this also means individuals usually cannot influence exchange rates. 

The incredible demand for forex created by international trade means the market is highly liquid. But the market is highly regulated, with some countries having more lax rules while others actively control the flow of their currencies. Researching your country’s regulations for potential investments is crucial before you begin trading. 

What is Crypto Trading?

Crypto trading is the buying and selling of crypto tokens to earn a profit. This can be done through either centralised or decentralised sources. Centralised exchanges allow you to create an account on their platform and trade with a large user base. Meanwhile, decentralised exchanges offer peer-to-peer trading.

Read more: Centralised Vs Decentralised Networks 

To get started, you need to open an account on the exchange of your choice. Using a decentralised exchange may also require opening a crypto wallet. Once you have created an account, you can deposit your money and begin investing. Alternatively, you can also swap one crypto coin for another instead of using fiat money. 

You can begin crypto trading by opening an account on ZebPay today.

Forex VS Crypto: What are the Differences?

Forex vs Crypto : What are the Differences

Investors and Market Players

The forex and crypto markets typically have different market participants. Crypto trading began soon after Bitcoin’s release and involved a small community of enthusiasts, miners and centralised crypto exchanges. As Bitcoin gained popularity, so did crypto trading. This led to large investment funds and corporations entering the market, while the number of retail investors has also grown exponentially. 

Read more: Crypto Trading Strategies

By contrast, forex trading has been around for decades. Most of the large participants are established banks and financial institutions that use forex trading to fulfil the needs of corporations. However, technological advancement has led to an easier trading experience for forex dealers. 

Operating Times

Forex trading can be done 24 hours a day, 5 days a week. This is made possible as there are many forex markets around the world. So when one closes, another market in a different country is still open. 

On the other hand, the crypto market is always open, 24/7. It doesn’t matter if it’s a Sunday afternoon or 3 A.M. on a Saturday, the crypto market is always available for trading. 

Difference Between Forex Market Cap and Crypto Market Cap?

Crypto tokens operate on blockchains, which are completely transparent stores of data. It is thus easy to determine the total market capitalisation of crypto by collecting this information. As of writing, the crypto market capitalisation is $806,593,000,000. 

Determining forex’s market capitalisation is more difficult. This is because the market is operated over the counter between parties operating on credit. It makes the system opaque and difficult to analyse. Therefore, estimates for the market capitalisation range from $700 trillion to $2,400 trillion – or $2.4 quadrillion. 

It is instead easier to consider the daily market turnover or daily trading volume. In 2019, this was estimated to be $6.6 trillion per day. 

Forex Volatility and Crypto Volatility

The forex market is dominated by several giant banks, while the currencies traded are controlled by the government of their country. This makes the forex market’s volatility extremely low. Some currencies move just a fraction of a per cent each day. This means traders typically use higher margins for trades.

By contrast, the crypto world is highly decentralised. It is also a smaller and newer market than forex. A large player choosing to buy or sell billions of dollars worth of crypto can considerably influence the market. This leads to very high volatility in the price of crypto tokens. 

Is Forex Safer than Crypto?

While the forex market has its own set of risks, it is a much older and larger market. It also has extensive regulation and the support of governments from around the world. Therefore, if there is a large shift in the price of a currency, central banks will be quick to react and correct the price. 

This protection does not exist in the crypto market as of now, and governments are actively working towards bringing standard operating procedures. Crypto is a mix of centralised and decentralised entities. Some smaller coins available may also be scams or have very low liquidity. This makes doing your research before investing even more essential. But at the same time, it is more transparent and easier to be a part of. And most importantly, crypto is more retail-centric.

Read more: What is a Crypto Scam

Final Thoughts

Both crypto and forex can be complicated to get started with. In the end, the choice is yours to make. While forex is a large and liquid market, returns can be much lower than those possible with crypto. But crypto also has the issue of being unregulated and highly volatile. Carefully consider the pros and cons of each option before deciding to invest your hard-earned money in either.

Learn more about the latest news in crypto on ZebPay blogs. Level up your trading experience using ZebPay’s brand-new update.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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