2021-09-19

Cryptocurrency - The Hybrid of Stock and Forex


Crypto is an investment medium that hit its popularity back in 2017. The term cryptocurrency comes to place it acts as a medium of exchange the term cryptocurrency when it is used as a token of payment in exchange for goods or services.

Forex vs Crypto

Listed like forex

 

In the last few years, the enormous growth of digital exchange platforms rose up offering trading services with famous pairs. This investment nature is how we see forex which is a widely used currency being used as a benchmark for other currencies.

For example, for Forex most famous pair that listed on most brokers are USD/GBP, EUR/USD or USD/JPY. The same goes for cryptocurrency as most of them will be paired with either BTC, ETH or USDT.

If you want to trade FTM on Binance, it only accepts pairs from BTC, USDT and their in-house coin of BNB. Thus, the process of purchasing will go a few turns before the payment can be made. This means if you have ETH and want to buy FTM, you need to change your ETH to USDT or BTC, then once the change had been made, then only purchases can be transacted.

Behave like stocks

 

Cryptocurrencies trading also implement the same nature as stocks trading wherein stocks trading, an investor needs to make extensive research on the company, their future prospect, long term projection and more.

It applies the same concept to cryptocurrencies too. Before making any investment, a trader has to do thorough research on the token, studies their whitepaper, future projects, roadmap, legality, scam possibility, scalability, community enforcement and many more.

Whale brings a big impact on both stocks and cryptocurrency. Imagine one day, Warren Buffet sell off all his Coca-Cola shares, what will happen to the price? This scenario happens to cryptocurrency too. One remark by Elon Musk stating Tesla no longer accepting bitcoin pushes the coin off its peak. Later when it starting to rose up, a big whale made his dump push bitcoin from $51 000 to $47 000 in just less than an hour.

Unless an investor decided to treat his/hers investment as a commodity and hodl till the price rise, it is advisable to study both strategies of forex and stocks trading, and replicate the move on cryptocurrencies.