Forex and cryptocurrencies are two investment alternatives that are widely discussed today. Both have their own characteristics.
Before investing in one of them, it is important to know the difference between forex and cryptocurrency so you don't choose the wrong one later.
What Is Forex?
Forex is the activity of trading foreign currencies. For example, buying Euros and at the same time selling US Dollars. This trade is intended to gain profits from the difference in buying and selling prices.
What is Cryptocurrency?
Cryptocurrency is trading virtual currency in the form of coins and can only be traded digitally. Cryptocurrency balances will be stored in a wallet or virtual wallet which can be sold at any time when the price rises.
The difference between Forex and Cryptocurrency
Knowing the basic differences about the alternatives invested is very important. What are the differences between forex and cryptocurrencies?
Terms Used
Even though both of them are for trading or trading, the terms used are different from one another.
In forex, there are two terms, namely long means making a purchase when the price rises to make a profit. Second, short, namely taking advantage of the moment of falling prices to make purchases in order to maximize profits in the future.
Meanwhile, in cryptocurrency, the two terms used are buy and sell. Buy is the moment to buy crypto assets, sell is the moment to sell it.
Liquidity
Whether or not selling assets quickly is determined by the liquidity of the assets themselves. The more liquid the asset, the easier it will be for investors to find potential buyers. By selling assets, investors can get a certain amount of profit.
Considering that forex has a high level of liquidity, the time needed for prices to match is very fast. It's no wonder that when the price edged up, investors rushed to sell it because the price also dropped quickly. If investors are negligent, the expected profit turns into a stump.
In contrast to cryptocurrencies which are actually quite liquid, but the gap in price reduction is very sharp. No wonder if the price prediction is wrong, it can even cause big losses. It is also difficult to return the price to its original price, unless investors patiently wait.
Volatility
Investment instruments have different volatility. Volatility itself is the trend of changing a price where the higher the volatility, the faster the price changes. The trend of fast price movements is something that is very popular in trading activities because it can generate fast profits in a short time.
When compared, cryptocurrency has a higher volatility than forex. Even more so for crypto outside of Bitcoin, such as Ethereum, Dogecoin, Alitas, and Cardano.
If investors have high guts, then crypto is the right investment. If not, it's better to just play on forex, which has a lower risk.
Price increases
Volatility affects the price of an investment instrument. In this case, cryptocurrency price movements are much higher than forex. It's no wonder that cryptocurrency investors who have been around for a long time are now enjoying big profits from the money they invested. Even investors who just bought crypto a few months ago, as long as they choose the right coin, they can become rich in an instant.
The increase in cryptocurrency prices tends to be unreasonable. Even good news doesn't necessarily make crypto prices rise. In contrast to forex, where price fluctuations are heavily influenced by existing news.
If there is a war, political threat, or natural disaster in a country, it is very natural for the forex price to drop. This is a moment that is often used by traders to maximize their investment profits.
Fundamentals
From a fundamental standpoint, forex has very clear fundamentals than cryptocurrency. This technique is apart from technical analysis which refers to the price fluctuation chart.
Forex prices are heavily influenced by economic sentiment in a country based on the currency pair used. For example EUR/USD. Traders must look at the economic conditions in Europe at that time, then compare them with market interest in the United States.
While cryptocurrency fundamentals are more influenced by blockchain activities, such as the issue of the use of blockchain technology that was disclosed by President Xi Jinping automatically raised the price of Bitcoin at that time.
Transaction Time
The last difference between forex and cryptocurrency is the transaction time. Both of them can be traded 24 hours a day, but forex trading takes place 5 days a week. While cryptocurrency trading occurs every day or there are no holidays.
For traders who want transactions every day, then cryptocurrency is the right investment alternative. Moreover, if you have capital and high guts.
Determine the Right Investment Alternative For You
Forex and cryptocurrencies are two investment alternatives that fall into the prima donna category of society, especially millennials. Which one is the best and most profitable, back again to each other personally.
In essence, choose the investment that you think is most suitable for you from all aspects. Not only the benefits, but also the risks borne.
source: cermati.com/artikel/forex-dan-cryptocurrency