For decades, active traders who were looking to translate massive volatility into substantial profits firmly positioned themselves within the forex markets due to the liquidity and volatility of fiat currencies.

Over the past decade, however, the emergence and growth of digital currencies like Bitcoin has led to an exodus of traders away from the forex markets and into the crypto markets, enticed by the magnitude of volatility experienced by cryptocurrencies that dwarfs that seen by fiat currencies.

It is important to note that there are key differences between these two markets, with each one encompassing a unique set of features that can prove to be beneficial or detrimental to traders based on their strategies and trading experience.

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Crypto vs. Forex – The Basics 

The cryptocurrency markets have been rapidly ascending to mainstream adoption over the past decade, with the launch of Bitcoin in 2009 marking the genesis of blockchain technology, which has since spread like wildfire, subsequently followed by the launch of thousands of other cryptocurrencies all competing for investors’ funds.

Despite Bitcoin’s rise from being worth virtually nothing to having a market capitalization of billions of dollars, it is imperative to note that the crypto markets still remain relatively small, with a market capitalization of just under $250 billion across all digital assets, and an aggregated 24-hour trading volume of roughly $73 million.

Bitcoin, which is the largest digital asset, currently boasts 66.3% dominance over the entire market, which means that it has the largest market capitalization and the most trading volume, making it the most liquid cryptocurrency.

Other major cryptocurrencies besides Bitcoin – which are commonly referred to as altcoins – naturally have lower liquidity compared to that of BTC, although it is important to note that the liquidity amongst the top altcoins is perfectly suitable for nearly all traders, and only tends to have an impact on groups or individuals looking to buy or sell massive quantities of these digital assets on the spot markets. 

While looking at the forex markets, however, it grows abundantly clear as to just how small the crypto markets currently are, as trading within the FX markets reached $6.6 trillion in total turnover in April of 2019, marking a immense climb from the $5.5 trillion in turnover that was seen within the forex markets in 2016.

This massive trading volume provides traders with liquidity that is unparalleled within other markets.

Additionally, the age of the forex markets has allowed them to grow far more mature than the crypto markets, and the established set of regulatory frameworks surrounding them may grant traders some peace of mind.

On the flipside, the established size and well-regulated nature of the FX markets is precisely what ensures that traders won’t be able to regularly catch the massive swings that are commonplace in the crypto markets, which can translate into enormous profits if they are traded properly.


Which Market is More Suitable for Traders?

The forex markets have long been a popular environment for active traders looking to profit on volatility across fiat currencies, but it is imperative to keep in mind that the tempered volatility and robust regulatory frameworks surrounding these markets tend to make them less profitable for active traders who are not utilizing massive sums of capital.

Alternatively, the crypto markets have become a playground for small and mid-sized traders who utilize the market’s tremendous volatility to bolster their bottom-line profitability, as Bitcoin and other major altcoins regularly see price movements of 10% or more in both directions – which if traded properly can translate into immense profits.

The crypto markets also tend to be uncorrelated from news and global events, meaning that their volatility is often driven by technical factors, making it easier for traders to attempt to predict and rationalize movements.

In comparison, the volatility seen by fiat currencies in the forex markets can largely be attributed to economic and political trends impacting the stability or economic growth of particular countries, which can be a positive thing for traders who are looking to capitalize of global trends rather than technical formations.

While keeping these differences in mind, it is clear that both markets can play a role in traders’ strategies, as deploying capital to two separate markets that are fundamentally different and driven by completely different forces can help traders hedge their risk and provide them with different opportunities to garner profits.

What is the Best Way to Trade Forex and Crypto?

One tool that individuals looking to trade within the forex and crypto markets should carefully consider utilizing is leverage, which allows traders to use significantly more capital than they otherwise would be able to, which can make volatility within the FX and crypto markets even more lucrative.

PrimeXBT is one of the only platforms that allows traders to open short and long positions on multiple forex majors and cryptocurrencies all in one place, while also allowing traders to utilize up to 1000x leverage.

As previously discussed, fiat currencies tend to be far less volatility than digital currencies, which can hamper the profitability of traders. PrimeXBT, however, counters this by offering up to 1000x leverage on fiat currencies like EUR/USD, while offering 100x leverage on cryptocurrencies like Bitcoin.

By tapping into the higher leverage they offer on the forex markets they support, traders can see large profits stemming from what would otherwise be relatively small price movements, essentially allowing individuals to compete with the massive traders that otherwise would dominate the markets.

Furthermore, PrimeXBT offers users a clean interface with a plethora of trading tools and indicators, while also boasting cutting-edge security features that give traders peace of mind knowing that their funds are fully secure, making it the perfect platform for traders who are looking to utilize leverage to trade either crypto or forex.

By utilizing leverage to trade across a diverse range of markets, active traders can ensure that there’s never a dull moment and that they make their trading strategies as profitable as they can possibly be. 


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