Every trader knows that the forex market is the world’s most liquid market, running 24 hours a day all around the world. However in recent years, an interesting new dimension has been added to this market to make trading even more exciting – cryptocurrencies like Bitcoins. At first, only one or two brokers offered the option of trading Bitcoins, but over the last couple of years, increasing numbers of forex trading brokers are now accepting Bitcoins as part of a currency pair, allowing investors to trade pairs such as the USD/BTC. Some of the major players in the industry which now offer Bitcoin trading including AvaTrade, 1 Broker and Bit4X.
Bitcoins are a type of digital currency, which is made and held electronically. Created in 2008, it first appeared on the forex markets as a tradable asset in 2013. It is not controlled by a central bank or government and does not exist in a physical form like the Euro or the Dollar. Bitcoins are created by people and businesses who run computers around the world and use software to solve mathematical problems. There are many advantages of trading Bitcoins as an asset, and here we look at why it has become such a popular underlying asset.
What are the Benefits of Forex Trading with Bitcoins?
One of the major benefits of forex trading with Bitcoin as an underlying asset is that no central bank is able to change the valuation of Bitcoins. This frees Bitcoin rates from any geopolitical influence and issues like inflation or individual countries’ interest rate rises.
Bitcoins also incur no transaction costs as they require no bank or clearing agency involvement. Even global transfers will incur no costs and brokers will not charge any withdrawal or deposit fee on Bitcoin transactions, boosting trader profits.
Bitcoins are an extremely secure way of trading, with no need for an investor to reveal any credit card or personal banking details when withdrawing or depositing money. This is a great advantage to those who value the security and anonymity of their financial transactions.
As Bitcoins are a decentralized currency, there is no closing time for executing trades, so this type of asset trading truly is a 24/7 market making it a great choice for any serious trader.
Why Is Bitcoin a Good Choice in Forex Trading?
Trading with Bitcoin as an asset is very similar to trading in any other currency, however many traders are willing to take extra risks when trading in Bitcoins to gain a larger profit. The Bitcoin market is incredibly volatile in contrast with the relative stability in the Forex market and this provides an ideal opportunity for traders to safeguard their Bitcoin investments, turning them into a forex investment. Although Bitcoin prices are determined by supply and demand, unlike the forex market there is very little regulation which leads to considerable speculation and volatile prices. As the Bitcoin market is also still relatively small, price fluctuations can also swing quite wildly in response to relatively small sums.