Introduction
Bitcoin (BTC) is the most traded cryptocurrency in the forex market today. Many forex traders today now choose to trade BTC as CFD using online forex brokers rather than do so using Centralized crypto exchanges. The sad news of many crypto exchanges going bankrupt in 2022 has caused many crypto traders to become uncomfortable trading Bitcoin using the popular crypto exchanges today. Hence, BTC investors have diverted their attention into trading BTC as CFDs using online forex brokers. Trading BTC using these online brokers seems more reliable when the broker is regulated.
This means there would be hardly any case of the broker going bankrupt as we find rampant with the crypto exchanges today. Virtually all the regulated brokers are insured and have their reserve funds for processing clients’ withdrawals preserved at a segregated bank.
With the influx of BTC investors into the Forex Market, the volume of BTC traded today as CFD has improved massively. The forex market has benefited from it, increasing its total market capitalization all the more above $6.6 trillion. This work has therefore examined briefly the major ways in which BTC has affected forex trading today.
What is Forex Trading?
Forex trading is a popular investment package that allows traders to exchange different financial instruments such as Foreign Currencies, Crypto Currencies, Stocks, Commodities, Indices, etc. Often these instruments are traded as CFDs. In this case, the trader does not need to possess the purchased assets, rather he bargains to benefit from the changing prices of these assets based on the position he takes in the market. Forex trading is a regulated business which makes it more reliable compared to the other markets that are not regulated.
Meaning of BTC
BTC is the common abbreviation for writing Bitcoin today. Often it is paired with the US dollar and written as BTCUSD. The fact that it could be paired with a foreign currency such as the USD has made it possible to trade BTC at the forex market too.
How has BTC Affected Forex Trading so far in 2022?
BTC is the most volatile digital asset traded today in the market. The fact that it is also possible to trade BTC as CFD in the foreign exchange market has been a great boon to the industry. Thus, most funds that would have been pushed directly into the crypto market for purchasing BTC as a Spot digital asset are now diverted into the Forex Market for trading BTC as CFDs. This has contributed significantly towards the rapid growth in the market capitalization of the forex market today.
Many crypto traders have all the more lost trust in trading BTC using the popular crypto exchanges today after the crash of the second largest crypto exchange – FTX. Consequently, such traders have moved into forex trading where they can trade with highly regulated forex brokers whose activities are more transparent and monitored by the regulatory authorities. Forex brokers are usually insured against future damages and less likely to go bankrupt as we find rampant crypto exchanges today. This has resulted in a large increase in the number of forex traders today.
Above all, the fact that it is now possible to trade BTC amongst the forex pairs has further increased the number of financial instruments available for traders to select from while trading.
What is the Relationship between BTC and Forex Trading Today?
BTC is one of the most popular digital asset traded as CFDs today in forex. It is usually paired with the US dollar as BTCUSD or any other foreign currency provided by the broker on their platforms.