Making sense of crypto markets always invited comparison to traditional assets. On the surface, crypto trading is similar to stocks, but also to the forex market. The forex market may be a more apt comparison, since crypto startups do not treat their tokens as securities.
Crypto businesses rarely issue earnings reports, and owning a coin or a token does not entitle oneself to a share of the network. Only in certain cases owning crypto coins pays out passive earnings, which are not quite the same as dividend stocks.
Forex, on the other hand, is a trade between the pure perceived value of currencies. Of course, there are a few caveats, in that fiat currencies tend to be protected and deliberately kept within a predictable price range. Only rarely do currencies fluctuate wildly, as in the case of hyperinflation.
How Do Crypto and Forex Markets Compare?
The total market capitalization of all crypto assets is estimated at $2 trillion, of which $1T is the value of Bitcoin (BTC). However, the exact trading volume of the market is a more uncertain estimate. BTC trading surpasses $60B per day, and the trading volume of Tether is above 100B per day.
The daily volume of the forex market is more than $6.6 trillion per day, and the value of the underlying assets is actually the global GDP. So a rough evaluation of that is about $75T. The US dollar money supply is above $18T. But it is difficult to make a size comparison between the BTC market value and a fiat currency.
Тhe US dollar cannot be refused as legal tender, while BTC can have varying levels of acceptance and its price fluctuates. The realized value of BTC is much smaller in comparison to its projected value, and not all coins can be sold at that price without a crash.
So while the crypto market remains small by comparison with the forex trading volume, it is still a notable part of global economic activity. In a little more than a decade, the crypto market has gained enough visibility, with the help of social media and shifting investor attitudes.
Millennial and Zoomer Investors Drive the Trends
In 2021, there are clear trends for a new investor profile emerging. Millennial investors are a unique cohort that had to encounter a series of personal finance headwinds, from stagnating wages to an overheated housing market.
At the same time, the expansion of mobile apps and social media trends meant the new investors were much more open to operate their personal finances and trying out alternative investments. Investment hubs like eToro are becoming a one-stop-shop for exposure to forex, stock trading, and for the past couple of years, crypto trading.
The top 3 traders that are getting copied on eToro are, right now, success stories in crypto and forex. In 2021, crypto is king, with Jay Edward Smith being the top copied trader. Much like a millennial investor, Smith mixes in his interests in futurology, automation…