Cryptocurrencies and foreign exchange (forex) have some things in common and can even be traded against each other, but which is the better investment? Both can play a role in a well-diversified portfolio, but if you have to choose just one, it depends on your goals and other factors.
Similarities and differences
Cryptocurrencies and forex are both forms of currency, which means they bear quite a few similarities. However, investors who don’t like to speculate on new assets might want to stay away from crypto and opt for forex instead. There is still a certain amount of speculation that goes along with trading forex, though, so that is something else they have in common.
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The crypto market and the forex market are both open around the clock, but the forex market is only open Monday through Friday, while the cryptocurrency market never closes. If you are limited in the time you have available for trading, it could make a difference on which asset you choose to trade.
On the other hand, cryptocurrencies are unregulated, while forex is regulated by the central bank of the country whose currency you are trading.
Choosing between forex and crypto
Cryptocurrencies and forex both present opportunities for investment gains, so if the above similarities or differences didn’t sway you in one direction or the other, there are other factors to consider. For example, you should think about how long you want to hold the asset and wait for its value to appreciate.
The forex market tends to be very fast-moving, with many positions remaining open for less than a day. Forex traders have to be on their toes, ready to make a trade the instant they see an opening. On the other hand, cryptocurrency traders may be able to buy and hold for an extended period.
Crypto traders may choose to sell their digital currency quickly because prices are very volatile. The bitcoin price, in particular, has been volatile, which means it may be possible to buy some at a lower price and then sell it in less than a week. However, there is also value in holding bitcoin or other…