Crypto vs Forex Market – 12 Similarities & Differences

What are the similarities and differences Crypto vs Forex market.There are different avenues in the financial market to invest in and earn more money.

Two such are the forex and crypto market. In the past few years, cryptocurrencies have made a huge impact on the global economy and are being adopted by several countries, merchants and businesses.

Though the crypto market and forex market serve the same purpose, which is to provide returns to the investors and traders, there are significant differences between the two apart from a few similarities.

The crypto markets and forex markets both offer a lot of opportunities to the investors and traders. Check out Differences Between Forex vs Crypto Profitability.

Therefore, it is quite natural for a trader to wonder whether or not they should focus on this particular market instead of the forex market or focus on both and have the best of both worlds.

However, most people are unaware of the differences between forex and crypto markets especially and make their investments, which results in a drastic outcome in most of the cases.

If you do not want to have a similar experience, you should first have in-depth knowledge about the two markets and then go ahead with your investment endeavor.

This article will explain both the similarities and differences between these two markets and asset classes so that you can make an educated and informed decision.

Crypto vs Forex Market: The Similarities

Crypto vs Forex Market

Ideally, jumping into any one of these two markets and making an investment without being confident and knowledgeable may not provide the results as desired, for which you, and not the market, is to be blamed.

Here are a few major things that you should know to tread and trade confidently in either one or both of these markets. First, take a look at the similarities between them.

1. Requirements

In order to participate in the crypto or forex market, you will first need to create a dedicated account to trade with.

Apart from that, you will also need to have a set of modern computers, or even a smartphone for that matter if you are not a regular and a large trader, along with a stable and strong internet connection.

2. Knowledge

You can expect to have a tough competition with other traders and investors in both these markets and therefore, if you want to be successful in either of them or both, you will need to be quite knowledgeable in the first place.

It is not very difficult to achieve because you will get a lot of charts, news sites, and other tools that will keep you in the loop and informed about the latest happenings, events, trends and movements surrounding these two markets.

As for knowing the basics of the crypto market and trading, it will be much easier if you have some experience in the forex market. It is also true the other way around.

3. Driving Factors

Both these markets, crypto and forex, are driven by one particular factor of economics – the balance between the supply and demand of trading assets.

This means that the price of the assets traded in these two different markets will rise when there is an increase in the number of buyers rather than sellers.

Conversely, the price will fall notably when there is an overwhelming number of sellers active in the market in comparison to the number of buyers.

4. Tools

Both these markets are easier to tread because both of them use familiar indicators, market signals and chart patterns.

Therefore, if you have some prior knowledge of using these tools while trading on any one of these two markets, it will be much easier to do so in the other as well.

Crypto vs Forex Market: The Differences

Now, take a look at the differences between the two markets to have even a more profound knowledge.

5. Instruments Available

When you compare the two markets you will see that there is a notable difference in the number of instruments available in each of them to trade.

In the forex market, the traders usually are offered an opportunity to trade with some of the major currency pairs.

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These include EUR and USD, USD and JPY, GBP and USD, USD and CHF, USD and CAD, AUD and USD, NZD and USD, and more.

In addition to that, if you are quite experienced in forex trading, the market will also allow you to try your luck by trading with some more exotic currency pairs.

This may include a common or a major currency like the USD and a lesser known currency of any developing economy, for example, that of Mexico or South Africa.

On the other hand, when you focus on the crypto market, you will get tens of thousands of different types of crypto coins to trade with.

In fact, as of now, you will find more than 11,000 different types of crypto coins to trade with, and this number is growing continuously and rapidly with each passing day.

A few of these are most popular and commonly traded such as Bitcoin or Ethereum while others are especially known to and used by the hard-core and more advanced crypto enthusiasts and traders.

6. Liquidity Factor

In terms of liquidity, the forex market is considered to be extremely liquid in comparison to the crypto market. It is for this particular reason that the trading volume of this market is comparatively much higher than the trading volume of a few specific coins in the crypto market.

This is irrespective of the position size of the traders. This means that, as a trader, you will be able to buy or sell your preferred forex instrument much easily without any material slippage.

Moreover, this will also allow you to make amendments in your trading strategies based on the price of that particular forex asset.

In contrast, this is not possible in the crypto market because, as you may know, the crypto market is extremely volatile in nature. For most of the crypto coins the market capitalization is typically much less than forex, and out of that more than 45% of it is linked with Bitcoin.

This results in low liquidity and therefore for most of the cryptocurrencies the trading is not as active as it is in Bitcoin. This means that you as a trader will have some difficulty in getting out of your trading positions at the desired price.

7. Tracking and Monitoring

As stated earlier, there are lots of crypto coins available in the market to trade with. The features and potential of each of these coins are also quite different from one another.

This means that you will have a very hard time keeping track and monitor every single of them to know its performance.

Therefore, if you want to trade with lesser-known crypto assets there is no way to do it without diving deeper into its fundamentals to be aware of all the opportunities offered by it and the crypto market as well.

As for the forex market, the choices are limited, and most importantly, most of them include one of the major fiat currencies of the world.

Therefore, there is not much need to dive deep into them in order to track and monitor their performances and understand the trends well.

8. The Volatility Aspect

When you consider the volatility of the instruments, the crypto coins are extremely volatile which affects the market as well in terms of stability in coin price and market conditions.

It is not only the smaller crypto coins but also the major ones that are subject to dramatic changes in their prices. It may reach the zenith one particular day and plummet to the nadir in the next.

In comparison, the instruments dealt in the forex market are not as volatile as the crypto assets and therefore the forex markets are more stable in comparison to the crypto markets.

Therefore, irrespective of the type of fiat currency, there will be no significant upward or downward movement in its value within a short time frame.

However, if this event occurs as a rarity in the forex market, it will typically happen with the exotic pairs. In spite of this, the risks in the forex market can be controlled quite easily.

9. Profit Potentiality

However, in spite of the volatility of the crypto market, the profit potential offered by it is much higher in comparison to the forex markets. It is one of the primary reasons that the crypto markets have gained so much popularity in the last few years especially.

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The trading opportunities offered by the crypto market are also much more than the forex markets. However, with more profit potential the risks involved in trading crypto coins also increase.

Therefore, all crypto traders should have a higher risk tolerance as compared to trading with forex instruments.

On the other hand, when you trade in the forex market, you can increase the potential to make profits by using leverage.

This is an aspect that is much more effective than that of the crypto market due to the difference in liquidity. If you choose the right amount of leverage for your trade, the risks can be reduced significantly while dealing with the forex instruments.

10. Business Hours

The crypto market never closes. It is open 24/7 and even on holidays. This means that you cannot stay away from your computer for a long time, even on the weekends.

You will need to make changes in your lifestyle and abstain from enjoying your weekends because this is when some of the big moves happen in the crypto markets.

The trading pattern of the crypto market is usually driven by the smaller crypto coins especially and the individual traders and the small investment companies involved in it.

However, bigger institutions now have also started to take part in the crypto market but their activities in it are not much as of now. It will take some time for them to influence the trading patterns of the crypto market.

On the other hand, the forex market is open 24/5. This means that the forex market will allow you to enjoy yourself with your family and friends on the weekend. Also, in this market, trading follows a specific pattern and is typically driven by the major institutions involved in this market.

11. Security Aspect

Yes, it is true that the crypto market is younger in comparison to the forex markets and is still in the early stages of development but it is quite safe and secure to get involved in.

It follows suitable security standards and regulations as laid down by several governing bodies. This enables the market to avoid the counterparty risks, the scams that may occur, and potential hacking issues.

However, in comparison to the security standards of the forex markets, the crypto market is still vulnerable and there are lots of incidents of loss of funds and money stolen from the accounts of the users.

In comparison, the security aspect of the forex market is pretty strong since every exchange involved in it is heavily regulated by the governments of respective countries.

This means that the forex traders are subject to fewer risks in comparison to the crypto traders. It is due to the well-developed market and stringent security measures that the possibilities of scams and unfortunate events have been almost eliminated from the forex market.

However, that does not mean that the forex traders should choose any and every broker available without checking whether or not they are registered and follow the proper regulatory and security measures.

12. A Few Other Differences

It is also good to know some of the other smaller differences between forex and crypto markets. This will help you to make a much better and more informed decision.

In terms of the size of the respective markets and trading volume, the forex market outshines the crypto market by a significant margin. The forex market has these edges because it has been around for a longer period of time than the crypto market which came into existence in 2009.

When it comes to the safety of funds of the customers, it is much more in the forex market because these funds are typically stored in a bank and are looked after properly. In comparison, not many of the crypto exchanges in the market have proper controls set up or meet the regulatory requirements to protect the funds of the customers.

When you consider the market players, those involved in the forex market are different from those found in the crypto market.

In the forex market you will typically find market makers that include banks, high-end financial institutions, hedge funds, trading houses, investments funds, retail traders, importers, and exporters.

However, in the crypto market you will find mainly individual traders and a few small companies. A lot of large institutions are found lacking because crypto still lacks mass adoption.

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There is also some difference in these two specific markets in terms of trading venues. The brokers in the forex market are connected to the banks and other market makers and even online trading platforms.

The trading venues for forex can be in several locations at the same time. On the other hand, the crypto market is typically dependent on two particular venues namely, the centralized exchanges and the decentralized exchanges.

These exchanges typically use P2P technologies to connect the buyers and sellers.

Which is Better – Crypto or Forex Market?

There is no way or no one to say that the crypto market is far better than the forex market or vice versa because both these markets have different features, functionalities, pros and cons.

However, when it comes to choosing any one of these two markets, there are a few specific aspects that you should focus on in order to make the right choice apart from your preferences. These are:

  • Your financial goals
  • Your trading needs
  • The capital at your disposal
  • Your trading style and
  • Your lifestyle demands.

Or, the best you can do to make an informed choice is to try your luck and performance in both these markets with a small amount first.

This will enable you to have a practical experience first-hand. After a couple of months you will easily be able to find out which among the crypto market and forex market suits you and your needs the best.

As said earlier, both these markets offer a lot of opportunities to the traders and investors and your primary objective should ideally be to take the full advantage of the market conditions.

If you choose to go with the crypto market, be informed that there is a significant amount of risk involved in such investments.

Though there are also some risks inherent to the forex market as well, it is not as high and obscure as it is on the invested capital in the crypto market.

However, occasionally, the forex market may experience a period of calm in trading. This period may last for days and even for weeks at a stretch.

As for the crypto market, you will surely have a lot of different crypto coins to choose from to trade with in comparison to the few offered by the forex market. However, it is quite impossible to keep a track of all of these different crypto coins.

This increases the risks involved in the crypto market due to limited knowledge. There may be times in fact when the value of several crypto coins may come down to zero ultimately, if the specific project does not work well.

This situation may also occur when the capital drifts into more recognized crypto coins. This is typically the standard when the crypto markets develop and reach the stages that are more advanced.

Therefore, you will have no other alternative but to choose a fixed set of crypto coins in order to monitor their movements and performances properly.

This means that, eventually, you will be working with a short trading watchlist in the crypto market, as you would in the forex market.

To sum up, it can be said that if you want to deal with money in a more traditional way with a little bit of risk involved, you should go with the forex market.

On the other hand, if you want to stay anonymous while trading and want to deal with the future of money, you should step into the crypto market.


You can make higher returns from your investments only when you are confident that the market is worth investing in. This article hopefully has helped you in gaining confidence in crypto and forex markets to help you make the right choice.