It’s not unlikely to see people draw comparisons between forex and cryptocurrency. Crypto, like forex, is now highly lucrative. Unlike forex, however, the hype and lack of regulation means cryptocurrency can be either a profitable investment, or an incredibly volatile Ponzi scheme.
We’re here to tell you that the truth lies in the middle, and that, depending on your experience and interests, one of them might be your ideal investment for 2022.
The foreign exchange market, typically referred to as forex, refers to the trading of national currency pairs. Investors in this market have to analyze the stability of different economies, as well as their demand for foreign goods, in order to calculate which currency will appreciate. Some of the most important factors to consider before investing in forex are:
It’s an Extremely Complex Market
Aside from international politics and finance, forex traders have to consider an enormous amount of variables. After all, each national currency has a complex relationship with others, and there are layers of influence that need to be untangled before making any decisions.
The Forex is Very Liquid
One of the advantages of trading with actual currency is that it’s tradable 24 hours a day, which creates a market with unrivaled liquidity. This makes it convenient if an investor owns multiple companies and may need an urgent source of cash, or if they just want to buy real estate with their profits.
It Has Shown a Low Reactivity to New COVID Variants
COVID variants can quickly put limits on international trade and travel, two factors that tend to affect the foreign exchange. When Omicron was declared a variant of concern, for example, the U.S. dollar depreciated in comparison to other, more solid currencies like the British pound or the Japanese yen. However, as soon as reports on the subsiding threat started to emerge, even riskier currencies started to appreciate.
Cryptocurrency trading refers to the buying or selling of blockchain-based decentralized currencies like Ethereum or Bitcoin. Some of these coins have increased in value considerably since their appearance, but before investing, traders should consider the following:
The Value is Based on Speculation
Cryptocurrencies are not a widely accepted form of payment. In fact, most traders buy and sell cryptocurrency not because they believe they can be used to make purchases, but based on how much traditional money they expect they will be able to exchange it for. As a result, the market value is very volatile and sensitive to hype.
They are Becoming Easier to Buy
The very publicized success stories regarding cryptocurrency have led to an increase in the number of trading platforms. Today, users can have access to a regulated cryptocurrency trading platform by simply downloading an app or signing up to a website. This is a move that has made cryptocurrency trading much more accessible, which results in increasing interest in the market.
They are Starting to Become Accepted as a Form of Payment
Despite the speculative nature of cryptocurrency, there’s currently a growing interest in accepting cryptocurrency as a form of payment. Crypto can now be used to pay at coffee shops, fast food restaurants, and vending machines in different countries, and companies like eBay are considering it as a future form of payment. There are also multiple crypto-based payment platforms in development. As a result, people could be more likely to purchase cryptocurrencies based on their inherent value, making the market a bit more stable.
Forex’s size and complexity make it more suitable for experienced traders. Its proven resilience to the threat of Covid variants makes it a very solid alternative. The only issue is the lack of innovation, which in contrast is the root of the thriving cryptocurrency market. Crypto trading is gradually becoming more legitimate and accessible, with new and exciting opportunities appearing every month— making it our recommended choice for adventurous traders in 2022.