Forex and crypto both markets are quite the same. That is because, in both markets, you will need a good amount of investment if you want to make some profit. On the other hand, both of those markets are highly volatile, and no one can predict anything easily. But crypto and forex markets have some differences, which are as follows:
Definition
Cryptocurrencies are digital currencies that are created with the help of blockchain technology for the purpose of decentralization of funds and so that people can maintain the privacy of their transactions. Cryptocurrencies are created with the help of the Proof-of-Work or Proof-of-Stake consensus mechanism. On the other hand, forex trading is foreign currency trading. I mean, suppose you have brought a foreign currency pair like USD/EUR. You can buy and sell that currency pair for real-time cash. So, it’s clear that cryptos are digital currency that doesn’t have any tangibility or real existence. And forex is a foreign currency that is real and has tangibility.
Market Size
If you compare the industry and market size of the forex and crypto industries, both of them are the massive market for investors. Where you will find thousands of currency pairs that you can choose and trade; at the same time, you will also find thousands of cryptocurrencies where you can invest and trade easily. But the fact is almost all the forex traders choose only eight major forex currency pairs since those are the most profitable and secure for investment. On the other hand, 70% of the total market of crypto is occupied by Bitcoin. However, forex’s entire market capitalization is more than $2.4 quadrillion, which is an unthinkable amount. And crypto’s entire market capitalization is only $1.02 trillion. So, it’s safe to say forex is the biggest market in size.
Liquidity
We all know that forex is a far bigger market than crypto, so there are a lot more opportunities for investors in the forex than cryptocurrencies. Since forex is a bigger market and has more investors than crypto, the forex market has more liquidity than the crypto market. On the other hand, the crypto market only trades on intangible assets that have value, but those assets are not in liquid form. You have to exchange them for real cash, and it’s not an easy process. But forex is foreign currency. So those are already in liquid form. That’s why the forex market has more liquidity than crypto.
Volatile
I think both the forex and crypto markets are extremely volatile. However, forex is a big industry that has massive market capital and investors. And this market is very unstable, and experts can’t predict when the currency will suffer the swing. Besides, this industry requires a good amount of investment if anyone wants to make a profit.
On the other hand, cryptocurrency is way more unstable and volatile than forex. I mean, any major event can change the crypto market that traders never thought about. The prices of cryptocurrencies change so drastically that you can’t think about it. For example, alone, bitcoin sometimes swings a lot. Sometimes, its value becomes double. And this year, the market crashed suddenly, and the Bitcoin price has fallen to less than half.
