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Forex vs Cryptocurrency Trading – How do They Compare?
At first glance, there are obvious similarities between fiat and cryptocurrency, with both classed and viable mediums of exchange and at the centre of incredibly lucrative markets. For example, the total value of the forex market is estimated to be in excess of $2.409 quadrillion, while the combined market cap of the crypto market was $809.00 billion as of December 21st, 2022. While the latter is lower than the market’s peak of £1 trillion recorded last November, it’s still indicative of a lucrative market with huge capital value. However, there are also marked differences between these two asset classes, and while there may be considerable overlap, they can each help to diversify your trading portfolio in 2023 and beyond.
Forex markets involve buying, selling and exchanging international currencies, which are traded in pairs and as speculative assets. This means that you can use one currency to hedge against another as you look to speculate on and profit from specific price movements without assuming ownership of the underlying financial instrument. In general terms, you’ll invest in the exchange rates between different currencies and forex pairs while potentially leveraging the market’s volatility to secure short- and medium-term profits.
While fiat currencies are tangible assets that theoretically have an unending supply (as they are supplied by central banks), cryptocurrencies are completely digital assets with a finite supply. This means that crypto tokens have no tangible value or corporeal form and, therefore, cannot serve as a secure store of wealth. At the same time, the finite supply impacts directly on each token, according to factors like scarcity and a generally high level of demand. Crypto assets are built on blockchain technology, which creates decentralised and distributed ledgers that create an immutable store of transaction data. This creates heightened transparency and minimises the risk of market manipulation, while there’s no central authority or third party to control assets or enact transaction fees. Check here: https://candao.onepage.me/
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