The Trading Bible Trading Guides Forex Vs. Crypto - Which One Is for You?
Forex Vs. Crypto - Which One Is for You?
By Glen Carey, Updated on: Jan 07 2025.
Deciding to trade forex or crypto currencies depends largely on a few important factors, including risk versus reward tolerance, a willingness to speculate and knowledge of how to trade both, since neither are easy for beginners.
Forex is generally considered safer than crypto currency trading since the latter is more prone to wider market swings given that there is no central regulatory body and there is far less liquidity.
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What Are the Main Differences between Forex or Crypto?
Despite currencies and cryptocurrencies being fundamentally very different they both still rely on supply and demand to determine prices.
Forex trading is the buying and selling of currency pairs in a monitored market that is open 24/7 hours. Crypto currency trading is the buying and selling of digital assets, such as coins, tokens and non-fungible tokens (known as NFTs) in both centralised and decentralised markets with very little regulation.
Foreign currencies are accepted as legal tender around the world, despite some restrictions in countries, while to date there are a number of nations and companies that accept crypto currencies for day-to-day financial and purchasing transactions, though this is starting to change as cryptocurrencies become more mainstream.
What Has More Tradable Assets – Forex or Crypto?
Despite crypto being a relatively new asset class in the financial world, it offers a far larger range of opportunities for traders to buy and sell.
CoinMarketCap.com puts the total number of coins at more than 17,000, including the most actively traded ones. These are Bitcoin, Ethereum, Binance Coin, Solana, and Cardano.
Bitcoin has the largest market capitalization, the largest user base and is still the most popular of all the coins, despite a large number of new entrants into the market. Some companies have started to accept Bitcoin, for example.
Forex has far fewer tradable currency pairs, and they are classified as major, minor and exotic. The major currency pairs, such as the EUR/USD, EUR/GBP and the AUD/USG, have considerable liquidity and are less risky compared with their minor and exotic counterparts.
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Is Forex More Profitable Than Crypto?
There is a clear winner here, though one must be mindful of the fact that the opportunity to make more money from trading comes with a much higher risk.
Trading crypto currency has far more potential to be profitable, and there have been a number of people that have made billions of dollars from trading them. The winners have been dubbed the ``Bitcoin Billionaires.’’ With a steady flow of initial coin offerings, there are significant opportunities to make money.
The relatively low fluctuations in the forex market may limit the amount of profit from trading but it controls the risks of unexpected losses.
The bottom line: a crypto trader can make more money with a smaller amount of money than trading forex. If you are looking for the opportunity to make profit in a short period of time, then crypto may be for you.
What Is a Safer Trade – Forex or Crypto?
There are downsides to crypto, though, and it is n0t for the faint of heart. While the forex is decentralised and not without risk, it is highly regulated with central banks, providing regulatory oversight.
Central banks will intervene to protect against excessively large and rapid changes in the value of their currencies. This ensures some stability, preventing currencies from either being too undervalued or overvalued for long periods of time.
This level of regulation is non-existent with the crypto market.
There is no central regulatory body in most countries, which allows for extreme fluctuations in the prices of currencies. In March 2020, when the Covid-19 pandemic lockdowns took hold, Bitcoin tumbled from above $10,000 a coin to $4,000. It lost more than 50 percent of its value in 2021.
Some crypto currencies, particularly the new and lesser-known coins, have little-to-no liquidity. Some are simply scams. The lack of regulation of the market makes crypto a much riskier trade, and more than one person has watched their money vanish into thin air.
Which Is Easier to Trade, Forex or Crypto?
This is a difficult question to answer because both pose challenges to the novice trader.
Given that the crypto market is so decentralised, it is very easy to buy and sell on different platforms that generally don’t charge a minimum fee. Crypto currency trading platforms will charge for each transaction, which varies between each site, and a trader will need a digital wallet and a verified account.
Some brokers also provide platforms to trade crypto, though not all of them.
Brokers won’t charge commission as well but they will make their margin on the spread, which is the difference between the buy and sell price. A trader will need to verify his or her identity before opening an account with a trader.
The forex market has a significantly higher level of liquidity, which makes it convenient for traders to buy and sell at reasonable prices and quickly enter and exit positions. This makes the forex market a relative winner when it comes to converting your trade into profit.
Given these dynamics, it is easier to trade forex than it is to trade crypto but both are good for those looking to make a profit, even with the risk.
What Is a Bigger Market – Forex or Crypto?
The hands down winner here is forex even though cryptocurrency has grown in popularity during the last few years.
The forex market has about $6.6 trillion in average traded value each day, making it the largest financial market in the world. The 24-hour trading volume of crypto currency is only in the hundreds of billions of USD. It has a total market capitalization of about $2.8 trillion.
Where to Trade Forex and Crypto?
Forex trading is mainly done through brokers who offer online accounts that can be opened relatively easily. There are hundreds of forex trading platforms to choose from with different fees and conditions.
Crypto trading can be done through decentralised or centralised. Other traders prefer decentralised platforms to remain anonymous and trading without a third party. Others use centralised exchanges for a more secure environment.
Conclusion
Determining whether to trade forex or crypto is ultimately a personal decision. If the decision is to trade crypto, here are a few things to keep in mind:
- Learn how the market works
- Look out for scams
- Start with some of the well-known coins
- Decide the platform to trade – through a broker or a decentralised platform
Frequently Asked Questions
What is Bitcoin?
Bitcoin is a digital floating exchange that is pegged to the USD. There is no underlying physical asset on which one can base the price. It is traded solely based on supply and demand in the market.
Is Crypto Trading Safe?
It can be but make sure that your trades and account are on a recognized platform with security measures. Always be careful of the potential risk of being scammed.
Are Crypto Currencies a Real Asset?
The simple answer to that is no. While you buy and sell the coins, they are not backed by any physical asset, like gold. You are essentially buying a digital asset with a price that is determined solely by supply and demand and of course interest.
What Is the Most Popular Crypto?
It remains Bitcoin. It has the largest market capitalization, has the greatest popularity and has the biggest influence in the market. With this said, other coins have been launched, including Ethereum, that have witnessed an increase in demand.
Do Companies Accept Crypto for Payment?
Yes, though not many. There are a handful of companies that have started to accept Bitcoin and other crypto currencies for payments. While there is no threat to the USD, it is considered a significant development. Paypal customers can use Bitcoin, Bitcoin Cash, Litecoin or Ethereum for payment at merchants using its payment system.