Forex bitcoin 9

How to trade bitcoin CFDs on Forex.

With all the hype surrounding the cryptomarket since its spectacular rise in value in 2022, there are not many people who haven’t heard about cryptocurrencies, including the most popular – bitcoin. However, is trading bitcoin as you would any other financial instrument possible? Is it traded on Forex? How volatile is it? And how can I analyse it to make sensible trading decisions? This and much more will be discussed in this article. We’ll also include two complete trading strategies to trade bitcoin and other cryptocurrencies, and show you what to pay the most attention to on the cryptomarket. So, let’s get started!

What is bitcoin?

Bitcoin is a revolutionary new product whose value is solely determined by the forces of supply and demand. The story began back in 2009, when an anonymous developer (or group of developers) named Satoshi Nakamoto developed bitcoin, authored the bitcoin whitepaper, and created the first database for bitcoin transactions. The real hype around Bitcoin started in 2022, when the cryptocurrency reached a record-high of around $20,000 and many people wanted to join the crypto-bandwagon. However, the price soon collapsed and bitcoin is now trading only at a fraction of its record price. The fall in value has also changed the approach that traders and investors use to trade bitcoin. Moreover, while a few years ago a buy-and-hold approach delivered the best results, times have changed and trading bitcoin CFDs is becoming increasingly popular using standard technical analysis tools. Traders who wanted to buy bitcoin had to go to a bitcoin Forex exchange, but nowadays many Forex brokers include cryptocurrencies in their range of tradeable assets.

There is still a lot of debate about whether bitcoin is a currency, asset, or something else. While many regulatory bodies and government officials don’t recognise bitcoin as a legal tender, it’s still possible to buy real physical products using bitcoin as a growing number of businesses are accepting cryptocurrencies, including Microsoft, Dell, and Virgin.

Bitcoin and other cryptocurrencies are based on blockchain, which is the underlying technology that makes the cryptocurrencies work. Many tech-giants have already recognised the value of blockchain technology, and new start-ups that use blockchain enter the market each day.

Let's take a quick look at the main characteristics of bitcoin and other cryptocurrencies:

Bitcoin can be used for real purchases – Each day, there are new websites which accept cryptocurrencies as payment for their products. Blockchain has enormous potential – New start-ups enter the market every day with products and services. This would not be possible without the use of blockchain technology. Cryptocurrencies are very volatile – Given their supply and demand dynamics, cryptocurrencies can be extremely volatile at times and change their value in double-digit percentage terms in a very short period of time. There is huge competition in the crypto-space – Currently, thousands of cryptocurrencies exist and bitcoin’s role as leader in the crypto-space has been threatened by names like Ripple, Ethereum, and Litecoin.

Can bitcoin be traded on Forex?

Bitcoin is still far from being considered legal tender worldwide. Traders had to use specific crypto-exchanges to buy and sell bitcoin, but with the invention of bitcoin CFDs (Contracts for Difference), trading bitcoin has become significantly easier. Nowadays, many brokers even offer bitcoin trading with leverage.

Differences between Forex and bitcoin.

Can you trade bitcoin on Forex? Not exactly. There is a notable difference between the Forex market and cryptomarket.

While bitcoin is not directly traded on the foreign exchange market, a growing number of Forex brokers include bitcoin CFDs in their range of tradeable assets to allow for bitcoin Forex trading. To trade bitcoin with a Forex broker, you need to find a broker that features cryptocurrency trading.

However, traders need to be aware that there are important differences between trading and valuing traditional currencies and cryptocurrencies. Forex traders know that anticipating the future move of a central bank can be a very tough endeavor, and the supply of a traditional currency can be suddenly changed or interrupted by unexpected market events. The supply of cryptocurrencies, on the other hand, is usually known in advance like in the case of bitcoin, where there is an exact amount of bitcoin that can be mined at a given point in time.

Another notable difference between the bitcoin and Forex markets is the way traditional currencies and cryptocurrencies are valued. With traditional currencies, such as the US dollar or Japanese yen, traders can use fundamental valuation models which derive the fair value of those currencies by using interest rates, inflation rates, and other macroeconomic data. With cryptocurrencies, on the other hand, traders have to rely mostly on technical analysis.

Trading platform for bitcoin CFD trading – MT4.

Just like trading any other CFD, you’ll need a trading platform to trade bitcoin CFDs. While there are many trading platforms to choose from, one of the best platforms remains MetaTrader 4. This is the most popular trading software for retail traders and offers great features as a bitcoin Forex trading platform. Some of the great tools that MetaTrader includes are listed below:

Advanced charting tools – With MetaTrader, you can use a range of charting tools to find high-probability trading setups on the crypto-market. Tools such as trend lines, channels, and Fibonacci levels can be easily applied to the chart. Wide range of timeframes to choose from – Whether you’re a day trader or scalper, MetaTrader features many popular timeframes which can be applied to the chart with a single click. Different order types – You can place pending orders on the market which become a regular market order once certain conditions are met. Examples of pending orders which you can find on MetaTrader include Buy Stop, Buy Limit, Sell Stop, Sell Limit, Buy Stop limit, and Sell Stop limit orders.

How to trade bitcoin’s volatility.

Bitcoin is an extremely volatile asset to trade. However, as traders we don’t have to fear volatility as this is what creates a profit opportunity in the first place. With increased volatility, money management becomes an increasingly important concept, so be sure to place Stop Loss orders on all of your Forex bitcoin trades.

Another important thing to consider is the position size of your trades and whether you are looking to trade with leverage. The price of bitcoin is heavily influenced by news, which can drive the price up or down by hundreds of dollars in a matter of minutes. If you take a large position size under such circumstances, you risk blowing your account or receiving a margin call if you’re trading on leverage. Make sure that your free margin is always large enough to withstand any negative price fluctuations.

Hint: Trading bitcoin is not much different from trading any other financial market. Risk only a small amount of your trading account on any single trade, and pay attention to the reward-to-risk ratio of your trades.

Scalping bitcoin strategy.

Now let’s take a look at a very powerful scalping strategy that can be used to trade Bitcoin and other cryptocurrencies on very short timeframes. The strategy is based on a combination of trend-following and mean-reverting techniques, and uses three indicators to find buy and sell setups.

1) 50-period and 100-period moving averages – These two moving averages are used to identify the short-term trend of bitcoin. A cross of the shorter 50-period MA above the longer 100-period MA signals an uptrend, while a cross of the shorter MA below a longer MA signals a downtrend. This is the trend-following aspect of the scalping strategy.

2) Stochastic indicator with a (5,3,3) setting – The Stochastic oscillator is used to identify overbought and oversold market conditions, which can signal a turning point in the current trend. In our strategy, we’ll use the Stochastics indicator to avoid placing buy trades when the market condition is overbought, and sell trades when the market condition is oversold.

Long entry.

A long entry is triggered when the faster 50-period MA crosses above the slower 100-period MA, signalling a short-term uptrend in bitcoin. This is the first condition which needs to be met. The second condition, which is very important to follow, is that the price makes a pullback to the 50-period MA and the Stochastic indicator moves from overbought conditions into normal conditions.

A Stochastic value above 80 signals overbought market conditions, while a value below 20 signals oversold market conditions. We need to wait for the Stochastic indicator to return from above 80 to below 80 to enter with a long position. Opening a long position when the markets are overbought can be considered risky, despite the fact that markets can remain overbought or oversold for a significant period of time. This is done to increase the overall profitability of the scalping strategy.

As the picture above shows, a long entry is executed when all three conditions are met – the faster MA crosses above the slower MA, the Stochastic oscillator returns from overbought market conditions to below 80, and the price makes a pullback to the moving averages.

Short entry.

The scalping strategy returns a short signal when the 50-period MA crosses below the 100-period MA, signalling a short-term downtrend. Besides this condition, the price also has to make a pullback to the 50-period MA (return and touch the MA), and the Stochastic indicator should return from oversold market conditions (below 20) to normal conditions (between 20 and 80). When all these conditions are met, we can enter with a short position in bitcoin CFDs.

This scalping strategy usually returns the best results when used on very short timeframes, such as the 1-minute or 5-minute timeframes. Stop Losses should be placed just above the recent swing high in the case of short positions, or below the recent swing low in the case of long positions. Profit targets should be at least the size of the Stop Loss, returning at least a 1:1 reward-to-risk ratio.

A short entry is shown on the chart above. As you can see, all three conditions are met – the fast-slow MA crossover, the price pullback to the MAs, and the Stochastics indicator with a value of above 20. As usual, scalping strategies aim for a large number of trade signals during the day with relatively small profit targets.

Day trading bitcoin CFDs.

Day trading bitcoin CFDs is not much different from day trading other financial instruments. What you want to do is look out for familiar chart patterns, for breakouts of support and resistance levels, follow the overall trend, or trade the price corrections of an established trend. In this regard, there are three main ways to day trade bitcoin CFDs.

1) Bitcoin breakout trading.

In this day trading style, we would look for breakouts around familiar price ranges and chart patterns such as Head & Shoulders, double tops and bottoms, various triangle patterns, or channel and trend line breakouts, to name a few. A breakout is usually followed by a significant buying or selling momentum in the direction of the breakout, and day traders aim to catch this momentum and profit on it. To do so, day traders often use pending orders such as Stop and Limit orders, with the execution price set just above or below the anticipated breakout level.

The chart above shows a typical breakout trade setup on bitcoin based on a symmetrical triangle pattern. Breakout traders would like to catch the breakout as soon as it happens, with a profit target equal to the height of the triangle pattern itself.

2) Bitcoin trend-following.

A trend-following day trading approach is based on trading the underlying trend of the cryptocurrency. While this used to be an extremely profitable approach a few years ago when the crypto-market knew only one direction – up – nowadays most cryptocurrencies are ranging, and a breakout approach would likely produce better results. However, if a new trend in bitcoin is established, characterized by higher highs and higher lows in uptrends or lower lows and lower highs in downtrends, a trend-following trading approach could again be a viable strategy.

A simple trend-following setup based on the 4-hour timeframe and a falling channel is shown on the chart above. Each time the price comes close to the upper edge of the channel, a Sell Order could be executed. Under this approach, it’s important that the price hit consecutive lower lows and lower highs during a downtrend, or higher highs and higher lows during an uptrend.

3) Bitcoin countertrend trading.

Finally, bitcoin can also be traded with a countertrend approach which refers to catching price corrections which go against an established trend. Given the price volatility of the crypto-market and its strong and long-lasting trends in the past, I wouldn’t personally recommend this trading approach as it involves significantly more risk than a breakout and trend-following approach.

Bitcoin vs other cryptocurrencies.

While we mostly covered bitcoin in this article, other cryptocurrencies don’t differ much. Coins like litecoin, ripple, ethereum or bitcoin cash all exhibit similar price patterns and behaviours like bitcoin, and traders are free to trade those cryptocurrencies which show the best trade setups. However, bear in mind that most so-called altcoins are positively correlated with the price of bitcoin – when bitcoin goes up, most altcoins go up, and when bitcoin goes down, other altcoins usually follow.

Forex bitcoin 8

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Forex vs. Crypto.

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October 24, 2022, 4:00 PM · 10 min read.

Forex vs. Crypto: Key Differences.

Foreign currency and cryptocurrency may sound like similar, even overlapping, asset classes to many investors. They could be forgiven for thinking that non-U.S. currencies and Bitcoin share the same rules and should occupy the same part of your financial planning. Nothing could be further from the truth. In reality, cryptocurrency and foreign currency share little more than a name. These are radically different assets in both form and function. Here’s what you need to know.

SPONSORED: Find a Qualified Financial Advisor.

Consider working with a financial advisor as you weigh whether to invest in either of these types of securities.

What Is Forex?

Foreign exchange markets, or forex, is the field of investing in foreign currencies. Specifically, you invest in the exchange rates between currencies, making money as currencies gain or lose value against each other.

Investing in forex means investing in the movement of global economies. You are trying to predict which economies will gain and lose strength against each other and how their currencies will reflect this. You are also trying to predict how debt levels, import/export ratios and countless other factors will shift the demand for various currencies. Ultimately this system is based on the movement of money around the world as governments, companies and even individuals make purchases across borders.

As one of the most complex areas of investment, because there is no single marketplace, it’s not recommended for beginners. While traders can come together through specific brokerages and banks, every currency has its own relationship with every other. There is no central market or clearinghouse which controls these trades in the way that there is with a stock that gets listed on an exchange.

An Example of Forex Trading.

Forex vs. Crypto: Key Differences.

The best way to understand forex is by example. Say that you are an American investor whose base currency is the U.S. dollar. In other words, you take home your profits and pay your taxes in dollars. You hold $100,000 in your brokerage account with which to invest. When a forex trader invests they literally convert one currency to another. Instead of holding dedicated assets in a separate account, they simply hold different forms of cash in their portfolio. (In many ways a forex trader’s portfolio is a large and diverse bank account.)

Story continues.

Here, say that you make an investment in British pounds. The pound is usually stronger than the dollar, and right now it is trading at 1 British pound to $1.40. This means that if you exchange 1 British pound, you’ll receive $1.40 in return. If you exchange $1 you’ll receive approximately 0.71 pounds (71 pence) in return.

So you exchange your $100,000 and receive approximately 71,000 British pounds in return.

Now the exchange rate fluctuates. The pound gains strength against the dollar and now trades at 1 British pound to $1.45. In other words, it now costs more U.S. dollars to buy a British pound. It also costs fewer British pounds to buy a U.S. dollar. This is good because it means that your holdings (currently in pounds) have gained strength against your base currency (dollars).

You exchange your 71,000 British pounds back into dollars. At the new exchange rate, you receive: 71,000 * 1.45 = $102,950. You now have $2,950 more than you started out with.

What Is Cryptocurrency?

Cryptocurrency is a digital asset. This means that any given unit of crypto doesn’t have a physical form that you can pull out and hold in the way that you can withdraw a physical dollar. Instead the only place where a token (the base unit of a cryptocurrency) exists is in the digital account that says you own it.

The underlying technology behind cryptocurrency is complex and beyond the scope of this article. However, it’s worth noting that traditional, or “fiat,” currencies also increasingly work this way. For example, at time of writing the U.S. Treasury counted approximately $6.3 trillion in printed cash. At the same time the U.S. economy was worth about $23.67 trillion. That excess $17 trillion, the gap between the economy’s size and the amount of printed dollars, exists only as account entries on computer screens.

At time of writing there were around 6,000 individual currencies in trade, although that number fluctuates very quickly. Some, like Bitcoin, are intended as pure currencies. This means that the code behind this product does nothing other than make and regulate the supply of tokens. The whole idea is that you will spend them these tokens same way you would U.S. dollars and British pounds, paying for coffee and rent in Bitcoin tokens.

Others, like Ethereum, are intended as technology projects. This means that the code behind this cryptocurrency does something else and it uses the tokens as a way of funding or otherwise advancing that project. These are alternatively known as utility tokens because they are intended to do something practical rather than exist as a pure financial product.

This is the theory. However, despite having been around for more than a decade, no cryptocurrency project has ever moved beyond proof-of-concept. Pure currencies, such as Bitcoin, are traded as novelties but vendors who accept payment in Bitcoin then turn around and exchange it for a fiat currency with which they can buy a cup of coffee. And despite years of development, no crypto-based technology project has ever produced a marketable or successful product.

In practice, cryptocurrency functions a speculative asset class. While this may someday change, currently cryptocurrency is a trading commodity and not a functional currency or software utility. Almost all activity in cryptocurrency is based on traders buying and selling these tokens in hopes of making a profit in some form of fiat currency.

Very few people want bitcoins. What they want are the dollars they will get from selling their Bitcoin tokens.

Crypto vs. Forex as an Asset.

Forex vs. Crypto: Key Differences.

Cryptocurrency and forex are similar in that both are volatile, highly speculative financial assets. Investors buy and trade these products not for fundamental value, in the way that someone might buy and hold a stock for the value of owning a part of a company’s underlying equity. Instead they do so for the trade value. That is, the value of owning a foreign currency or cryptocurrency comes almost exclusively from reselling that asset to another trader.

There are several key comparisons to keep in mind:

Cryptocurrency and forex are actually fairly similar in this regard.

Both of these markets theoretically have a massive number of potential assets that you can trade. A forex investor can, in theory, trade literally any pair of currencies in the world. Meanwhile, a cryptocurrency investor theoretically has thousands of crypto projects.

However, in practice, both assets are defined by a very narrow segment of their respective markets. Almost all of forex trading takes place among eight main currency pairs. Meanwhile, almost all of the value of the cryptocurrency market is clustered among a handful of cryptocurrencies. Roughly 70% of the entire cryptocurrency market is held in Bitcoin alone.

In practice cryptocurrency offers a far more narrow market than forex, but both are theoretically large asset classes that are heavily defined by a small number of products.

The forex market is far more liquid than cryptocurrency.

As noted above, cryptocurrency is defined by the market for Bitcoin and there are a fixed number of bitcoins in circulation. What’s more, despite roughly $2 trillion in overall value, the cryptocurrency market is far smaller than it seems. With anywhere from $1 trillion to $1.4 trillion of that market held in bitcoins, there is a limited amount of room for investment in any token other than the high-volatility Bitcoin product.

By contrast forex has a market of a little more than $6.6 trillion at time of writing. This is held across a wider range of assets than the cryptocurrency market and a wider range of investors, meaning that investors will have a far easier time finding someone who can and will trade with them.

Forex is a highly volatile market. This should not be underestimated by any investor looking to get into the field. It is extremely difficult to predict how a currency will change at any given time, and it takes a large investment to make any significant money. As a result this is a very risky field of investment.

Cryptocurrency is even more volatile still. Bitcoin alone has experienced swings that double its value before cutting that market cap in half. The same is true of many lesser assets in this market. It is very common for investors to make a fortune and lose their shirts in the same week, even if you only ever hear about the people who made money.

Forex is a highly regulated market. This asset class has existed for as long as there have been markets in which to trade, and its volatility and global implications mean that governments take a very strict interest in people who trade currencies.

Cryptocurrency, on the other hand, remains something of a wild west. Crypto markets continue to insist that they are building technology products no more subject to SEC oversight than a Word document, while simultaneously turning advertising the benefits of investing in their cryptocurrency marketplaces. Government officials haven’t quite made up their minds about any part of crypto regulation, and action has slowed down as the market has grown larger.

This means that investors can more easily enter the crypto space as there are fewer regulatory hurdles to buying in. However, it also means that there is much more long-term uncertainty surrounding crypto. The Securities and Exchange Commission, IRS, U.S. Treasury and other relevant bodies will eventually regulate the cryptocurrency market just as they do all other securities marketplaces. (The extraordinarily high incidence of fraud among new crypto projects pretty much guarantees that.) As a result, investors should trade knowing that the only question is what those regulations will be, not whether they will happen.

Bottom Line.

Forex and cryptocurrency are two radically different asset classes. Both offer speculative, volatile ways of investing. However, they are otherwise different products in form, function and long-term stability.

Tips on Investing.

Given the volatility of these two types of securities and especially how rapidly the world of cryptocurrencies is evolving it makes sense to work with a financial advisor as you consider investing in either or both of these. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor, get started now. Forex and crypto are two of the most volatile asset classes on the market. But that isn’t always a bad thing! Volatility can mean gains as much as losses, which can be very useful so long as you invest wisely. With SmartAsset’s matching tool you can find a financial professional near you to discuss this kind of speculative investing, and exactly how it can play a role in your portfolio.

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Forex bitcoin 7

Trading Hot and Cold Trends: Your Forex Strategy Works in Crypto Too.

Trends in the market are cyclical. Sometimes, a currency pair or cryptocurrency is hot, experiencing a long and strong trend. At other times, trends turn sideways and become boring.

An example of a hot and popular trend right now is passive investing via the best staking crypto on Bybit. Staking crypto means your tokens will earn interest and all you need to do is hold on for the long term.

While this is relatively new in crypto, buying and holding an asset to earn interest is not a new strategy and has been used in FX for decades.

The common theme between hot and cold trends is that the strategies used to trade them in FX can also be applied in crypto. Below, we review five strategies used in FX that you can implement in crypto too.

5 Forex Trading Strategies You Can Use in Crypto Trading.

Forex traders are really good at reading the charts to identify the trends. Some trends are extremely long while others are sideways. A good trader will recognize the market conditions and apply a strategy that fits that market environment.

Fortunately, these tried and tested strategies from FX can also be applied and used in crypto. Below, are five popular FX strategies, and let’s discuss how they can be implemented for cryptocurrencies.

Breakout trade Carry Trade Strategy Day Trade Swing Range trade.

Strategy 1: Trading Breakouts on Metaverse Crypto.

Generally, within FX, there is a currency that is in a strong trend. The same phenomenon applies to crypto too. For example, for the past several months, metaverse crypto has been an extremely hot trend. Traders were scrambling to learn more about the metaverse and which cryptocurrencies serve these communities.

Once these hot trends are identified, a tried and tested strategy that is quite effective can be applied to the metaverse crypto or other hot trends is called “trading breakouts.” The trader will draw horizontal resistance above a recent high or the all-time high. When the market breaks above the resistance level, they buy. The benefit of this strategy is that it allows the strength of the hot trend to push the market higher.

Strategy 2: Passive Income.

Carry trading was a popular FX strategy prior to the Great Financial Crisis of 2008. FX traders would swap out the lower interest rate currency to buy higher interest rate currency. FX traders would earn interest income on the difference between the two currencies’ interest rates.

A similar type of passive income is available in cryptocurrencies too. After you buy crypto, you can stake that crypto to earn interest. Regardless of whether the value of the crypto moves up or down, your investment is earning interest in the native token. If the token’s value increases, then you are receiving interest on an appreciating asset. If the token’s value decreases, your interest earned will help cover a portion or all of that capital loss.

Strategy 3: Day Trading Smaller Trends.

Like FX, crypto is traded 24 hours per day. Day traders begin their day by assessing news and what big trends are developing. Then, after reviewing the charts, these traders will set up their entry and exit points based on the shorter-term trends on the charts.

Day traders will open and close their trades typically within a day and definitely within two days. Their goal is to repeat a process over and over, picking up bits and pieces of the larger trend to grow their account balance. As a result, a day trader only cares about the trends that would last for the next several minutes to hours.

Day trading is very popular within crypto too. Many times, the strategy used to day trade FX can also be used in crypto as both markets are very technical. With over 12,000 cryptos available, a good screener is needed to spot the big trends taking place on that day.

Strategy 4: Swing Trading.

A common starting point for newer FX traders is learning to swing trade. The margin for error is a little bit more forgiving in swing versus day trading. This is because traders don’t have to babysit and watch every tick of the market. Swing traders can set their entry and exit levels, then turn off the monitor.

Swing strategies also work when trading crypto. The technical indicators used in a swing strategy such as the MACD, RSI or Stochastic will be used the same way for the crypto markets. Since crypto trades 24 hours per day, it is helpful to implement a strategy that allows you to step away from the computer so you can keep your focus and not burn out.

Strategy 5: Range Trading.

Range trading is the opposite of breakout trading. Sometimes, the market trades sideways with no real direction. For FX traders, this could be the result of two countries that are strong trading partners with one another and both countries are experiencing similar trends. Sideways trading could also be due to illiquid times of day when trading activity is muted.

Within crypto, ranges will develop too. After a long and strong trend, the market may trade sideways to consolidate those gains. The sideways consolidation will frustrate the long traders forcing them to close out setting up the next large advance. Also, there are times during the day or over the weekend when trading volumes are low creating a lack of buyers or sellers to push the market.

Conclusion/Takeaway/Final Words.

The FX and crypto markets have a lot of similarities. Both markets trade 24 hours per day and are highly technical markets. Crypto will experience hot and cold trends just like FX. As a result, this allows the strategies used by FX traders to also be used in crypto.

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Forex bitcoin 6

Crypto and Forex.

Cryptocurrencies have been around for over 12 years, starting with Bitcoin in 2009, and have become increasingly popular ever since. But why would we mention Cryptocurrencies when we are discussing Forex? In this article, we will discuss the relationship between Cryptocurrencies and Forex trading and how to get trading access to both.

What are Cryptocurrencies and How Do They Relate to Forex?

Cryptocurrencies are a form of digital or virtual currency that can be used to purchase goods, exchange for other cryptocurrencies, or be traded in the form of Contracts for Difference on platforms such as Plus500. When trading cryptocurrency CFDs, you are effectively speculating on the price movement of the underlying instrument.

Moreover, Cryptocurrencies can be paired against other cryptocurrencies, they can also be paired against fiat currencies like the US Dollar (USD), the British Pound (GBP), and the Euro (EUR) hence making up a Forex-Crypto pair.

Furthermore, Cryptocurrencies are known to be highly volatile, sometimes experiencing massive price spikes or plunges in just one day. Therefore, you should always use risk management strategies and tools to avoid trading more than you can afford to lose. Plus500 offers free-of-charge risk management tools to help you attempt to minimize your losses in addition to free how-to trading videos and articles to help you make more informed trading decisions.

How to Trade Cryptocurrencies.

There are many ways to trade Cryptocurrencies, two of which are purchasing them from a Crypto exchange and trading CFDs on Cryptocurrencies through a trusted CFDs provider like Plus500.

There is a difference between buying/selling cryptocurrencies and trading CFDs on cryptocurrencies. You can purchase a cryptocurrency directly from a relevant Crypto exchange, but you would also need to create a cryptocurrency wallet and pay high fees for the transaction. In addition, you would have to store your cryptocurrency in a Crypto Wallet and remember the passcode in order to open it, as well as ensure that your device is protected from hacking threats which can risk your Cryptocurrencies.

On the other hand, if traders want to trade without dealing with the aforementioned factors, they can do so by trading cryptocurrencies’ CFDs. Trading CFDs on Crypto allows you to speculate on the price movements of the underlying asset without owning it. This means that you make gains or incur losses as a result of price movements in the underlying asset. Plus500 offers Contracts for Difference (CFDs) on a range of cryptocurrency pairs and instruments like Axie Infinity, Uniswap, Filecoin, Chainlink, Bitcoin Cash ABC, Ethereum, Bitcoin, and more, all of which are traded against the US dollar.**

Cryptocurrency Trading Can Be Similar to Forex Trading.

When trading cryptocurrencies, there are a few things you should keep in mind. Firstly, there are major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) in the same way that there are major fiat currencies, such as USD, JPY, GBP and EUR. These major cryptocurrencies have the highest trading volumes and are used as base currencies against both fiat currencies and other cryptocurrencies.

Secondly, CFD trading on cryptocurrencies and Forex is quite straightforward on the Plus500 CFD Platform, with the bid and ask prices clearly displayed. You can speculate on whether the price of the reference instrument will go up or down and place the relevant Buy or Sell order on Cryptocurrencies, Forex, and more.

Important Facts About Trading Cryptocurrencies.

While there are similarities and links between Cryptocurrencies and Forex, there are obvious differences traders should be mindful of. For example, Cryptocurrencies are typically more volatile than fiat currencies such as the USD, GBP and the EUR. The price of cryptocurrencies can fluctuate wildly, even on a daily basis.

The price of BTC, for example, has been known to fluctuate 10% or more within a day. And, since practically all prices of other cryptocurrencies are correlated to the price of BTC, when BTC performs well, the entire crypto market tends to follow and vice versa. Traders should be mindful that while Cryptocurrencies can be popular and profitable, their high volatility can also mean that traders can experience sudden losses.

Moreover, it’s also worth mentioning that there is still significant regulatory uncertainty surrounding cryptocurrency trading and a large number of scams and fraudulent activities have been reported. Accordingly, traders should choose their Cryptocurrency providers wisely and carefully.

Major Cryptocurrency Trading Pairs.

Now that we have discussed how Cryptocurrencies relate to Forex, we will mention the major and most-traded Cryptocurrency pairs available on Plus500’s platform. This is important for traders who may want to evaluate the liquidity that is available in the market before choosing their next trade.

Here are the most popular cryptocurrency pairs to trade due to their high liquidity and market capitalization:

BTC/USD - Bitcoin (BTC) against the US Dollar is by far the most commonly traded pair. In this instance, BTC is the base, with one BTC expressed in dollars as the quote currency. ETH/USD - Ethereum (ETH) is the second biggest cryptocurrency after Bitcoin. Because of this, it also experiences a heavy trading volume against the US Dollar, with plenty of liquidity. LTC/USD - Litecoin (LTC) is traded against the US Dollar. Litecoin is a coin designed to be faster and more lightweight than Bitcoin. Cardano/USD - Cardano (ADA) also traded against the US dollar, Cardano is the 7th largest Cryptocoin by market capitalization, with over $37 bn in market cap. Solana/USD - Solana (SOL) similar to Ethereum, Solana is a Cryptocoin and a platform that allows the running of decentralized apps.

Plus500 offers CFDs on the above instruments, as well as a unique Crypto 10 Index which follows and measures the performance of the top ten cryptocurrencies in the market, including Bitcoin, Ethereum, Cardano, Polkadot, and more.

Implications of Cryptocurrencies for Forex.

Cryptocurrency trading is still not as common as Forex trading, but traders’ interest in trading cryptocurrencies is steadily increasing due to their high levels of volatility.

Accordingly, if you choose to trade Cryptocurrencies, then you can trade them on the Plus500 platform, which offers a range of CFDs on Cryptocurrencies without having to create a cryptocurrency wallet. On the Plus500 platform, Crypto CFD trading is available 24 hours a day, seven days a week (except for 1 hour on Sundays).

* This article contains general information which doesn't take into account your personal circumstances.

** Instrument availability varies by operator.

Forex bitcoin 5

Forex vs Crypto.

At its core, any comparison between the forex market and the cryptocurrency market boils down to old and new ways of thinking about money. It may seem difficult to correlate currencies backed by countries with those by coding. But people are creating real buying power in their day-to-day lives learning both types.

If you’ve ever had forex vs crypto thoughts rolling around in your head, read on for some context that could help inform your decision.

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Table of Contents [ Show ]

Forex vs Crypto Similarities Forex vs Crypto Differences Pros and Cons of Crypto Trading Pros and Cons of Forex Trading Best Brokers for Forex Trading Best Brokers for Crypto Trading Which Market is Right for You? Frequently Asked Questions.

Forex vs Crypto Similarities.

Before we move into the differences between crypto and forex, let’s see why these markets may not be so different after all.

Forex and Crypto Play Together.

The most important similarity between crypto and forex is that they now hold value relative to each other. You may not believe in Bitcoin or Ripple as a legitimate currency, but forex exchanges do. The Chicago Board Options Exchange (CBOE) also believes in crypto enough to offer options contracts on them.

Although the CBOE only offered crypto futures contracts from December 2022 until March 2022, the Chicago Mercantile Exchange (CME) currently offers bitcoin futures. You can also trade contracts-for-differences (CFDs) of reputable cryptocurrencies on platforms like eToro just like CFDs of forex currency pairs.

Because cryptocurrencies and foreign currencies ebb and flow in similar ways, you can think of each investment similarly. Yes, you must use different strategies and study different indicators to make wise decisions, but these financial tools are not opposites.


If you’ve read anything about crypto, you’ve heard about the concept of “decentralization.” All that means is there is no central regulation on the market. Here’s a little secret: The forex market is also decentralized. No, is not a central regulatory body for forex, just a well-named exchange! (Click here for a Review to learn more about it.)

On its own, decentralization does not mean that a market is less stable. It does mean you need to watch your back when investing, but that should go without saying.

Similar Market Physics.

The same basic money physics that regulate movement in forex also regulates crypto. The notion of basic supply and demand is in effect: If there are more buyers than sellers for a crypto coin, the price of that coin generally goes up. More sellers than buyers means a crypto bear market, just like in forex.

Efficient market absorption of news means that both forex and crypto respond instantly to market shocks. For example, if a BTC whale converts $30 million BTC into Japanese yen, it affects the crypto market just as talk of war in the White House would change the value of certain U.S.-based forex currency pairs.

Forex vs Crypto Differences.

Differences between the markets will ultimately tell you which you prefer to invest in. Yes, you might invest in both, but the average investor often chooses one or the other as a starting point. When you get your feet wet, you might get to know other markets that you did not fully understand when you started investing.

Keep your eyes open for these differences.

Market Size.

The forex market is the No. 1 market in the world for trading volume—by a wide margin. As of May 2022, the cumulative market cap for the crypto market totaled around $256 billion. The Bank for International Settlements also reported an average of $7.5 trillion daily trading value in the forex market as of April 2022.

The large size of the forex market also gives it different levels of volatility and liquidity (concepts that will be discussed below). Forex beginners can start out trading currency pairs from stable countries with more protection from large losses before moving on to more speculative trades.

Keep in mind that currency pairs may seem simple when presented by industry experts, but they are new to you. Because the market is so massive, you can comfortably start with a simple pairing, learn what to do and slowly expand your portfolio without encountering anything that feels too complex to manage.

Volatility and Liquidity.

Crypto is a smaller market than forex, so smaller amounts of money can move crypto more substantially than forex. If another $256 billion entered the crypto market, we could ideally expect the prices of all crypto to double. That same $256 billion represents a change of about 4% in the forex market. As a result, the crypto market is much more volatile than the forex market.

A higher volatility means more risk for investors — a greater chance of an exponential upside as well as huge, financially crippling losses. Higher volatility also means less liquidity (ease of trading), because more people are naturally attracted to a smooth marketplace. Low volatility and high liquidity means the forex market can better absorb economic shocks. This benefits the average person — both investor and noninvestor — with relatively stable currencies even in bad economic times.

At the same time, an experienced investor can do quite well for themselves on the crypto market—if they do their research and know when to buy and sell.


Cryptocurrency first took off primarily because of its ability to foster anonymous transactions. Government intervention has limited the ability of top coins like Bitcoin and Ethereum to hide identities, but smaller coins like Monero, Zcash and Verge retain this characteristic.

Forex transactions, on the other hand, are regulated by a tight web of forex brokers and financial professionals known as the interbank market . Since 2014, the interbank market has incorporated a “know your customer” (KYC) standard that requires traders to provide personal information to access an exchange. Perhaps spurred on by crypto’s anonymous structure, companies like EagleFX that subvert or ignore KYC rules are popping up for forex traders.

Pros and Cons of Crypto Trading.

Before making a decision to invest in this quickly changing environment, consider the following pros and cons. Comparing these lists helps you understand how significant the drawbacks of crypto might be in your mind. Invest in crypto when you feel the pros outweigh the cons. If not, you may want to choose a more stable investment vehicle.

Pros Cons Anonymity High growth potential Low barriers to entry Low fees Increasing acceptance into mainstream society No government insurance for accounts Less secure marketplace Probability of total currency default Lower levels of liquidity Errors in underlying technology can drastically affect markets.

Pros and Cons of Forex Trading.

On the surface, forex is safer than crypto, but you still need to know what you’re getting into. Compare the pros and cons of both to determine if the cons outweigh the pros in your mind. Because it’s your money and your portfolio, you can do what best serves you in the moment.

Pros Cons Stability High liquidity Measure of centralized protection against fraud and theft Less potential for massive losses KYC standards protect traders and brokers from fraud Less potential for huge, short-term gains Gains easily tracked and taxed Higher barriers to entry High fees and middleman costs depending on your chosen broker Unexpected political events can shock the market and cause major losses.

Best Brokers for Forex Trading.

The broker you use for trading forex can make a huge difference in your success. Here are some of the best forex platforms to consider.

Forex bitcoin 4

How to trade bitcoin.

Start trading today. Call +44 (20) 7633 5430, or email to talk about opening a trading account. We’re here 24/5.

Start trading today. Call +44 (20) 7633 5430, or email to talk about opening a trading account. We’re here 24/5.

In 2010, bitcoin traded at less than $0.01. By late 2021, this was above the $40,000 mark. The bitcoin story is one of meteoric rallies and bursting speculative bubbles, with one constant – market volatility. This unpredictability – and high risk – is what attracts traders, but also why bitcoin trading should be approached cautiously by beginners and experts alike.

You can start trading on bitcoin by following these four steps:

Decide how you want to trade bitcoin Learn the factors that move bitcoin’s price Choose a bitcoin trading strategy Make your first bitcoin trade.

Decide how you want to trade bitcoin.

Traditionally, bitcoin trading has involved the buying and selling of the cryptocurrency on an exchange. But, you can also trade on bitcoin by speculating on its price movements using CFDs. These are a type of derivative – meaning you’ll take a position on market movements without owning any underlying coins.

Because CFDs are traded over-the-counter (OTC), you don’t need to buy and sell on a bitcoin exchange. Plus, CFDs are leveraged, which means you’ll use margin to open your position. This gives you full exposure to the larger position, for a smaller initial outlay. However, leverage amplifies your profits and losses, so be sure to take steps to minimise this risk.

Although CFDs are available on our award-winning platform, 2 you can also choose to trade bitcoin via MetaTrader 4 and access additional charting options on ProRealTime. And, thanks to our large client base, our bitcoin market is relatively liquid – so you’re more likely to have your orders filled at your desired price, even if you deal in large sizes.

Alternatively, you could take a position with CFDs on our Crypto 10 Index – an index tracking the price of the top ten cryptocurrencies, including bitcoin, weighted by market capitalisation.

Trading bitcoin with CFDs.

When trading with CFDs, you’ll open your position on margin – an initial deposit that’s a fraction of your total market exposure. If you think bitcoin’s price is set to rise, you’d ‘buy’ the market, or ‘sell’ if you think it’ll fall.

But, because the margin deposit is less than your actual exposure, your potential losses could exceed the deposit amount. It’s important to always take steps to manage your risk.

Trading bitcoin on an exchange.

As mentioned, you buy bitcoin itself when you trade the crypto on an exchange. This means that you’ll need to create an exchange account, put up the full value of the asset to open a position, and store your bitcoin in your own virtual wallet until you’re ready to sell. Unfortunately, we don’t offer these services.

Here’s how trading bitcoin with CFDs compares with buying the cryptocurrency through an exchange:

Trading bitcoin with CFDs Buying bitcoin through an exchange Cost to get exposure to 1 bitcoin Margin for retail clients is 50% of the total value of the coin Full cost of the coin Short selling Yes – select ‘sell’ to open your CFD position No – unless there is a willing counterparty Execution 0.0107 second execution speed and access our unique deep liquidity 3 Dependent on exchange liquidity levels Restrictions on funding and withdrawing None, withdrawing or adding funds is free and instant if transferred by debit card 4 You may be charged fees and encounter restrictions on adding or withdrawing funds Overnight funding charge Yes No Risks CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Keep in mind that losses can exceed your margin deposit, so it’s important to manage your risk Losses can accrue rapidly, so it’s important to manage your risk.

Note: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

What moves bitcoin's price.

To take a position on a bullish trend or short the latest bubble, you first need to understand the factors that have an impact on bitcoin’s price:

Bitcoin supply. The current bitcoin supply is capped at 21 million, which is expected to be exhausted by 2140. A finite supply means that the price of bitcoin could increase if demand rises in the coming years Bad press. Any breaking news that concerns bitcoin’s security, value and longevity tends to have a negative effect on the coin’s overall market price Integration. Bitcoin’s public profile depends on its integration into new payment systems and banking frameworks. If this is carried out successfully, demand might rise which will have a positive effect on bitcoin’s price Key events. Regulation changes, security breaches and macroeconomic bitcoin announcements can all affect prices. Any agreement between users on how to speed the network up could also see confidence in bitcoin rise – pushing the price up Market capitalisation. The value of all the coins in existence and how users perceive this to be developing will increase or dampen demand. Growing market capitalisation could see bitcoin become a more sought-after investment.

Bitcoin trading strategies.

Bitcoin day trading Bitcoin swing trading Bitcoin scalping Bitcoin hedging strategy Automated trading.

Day trading CFDs means you’ll open and close a position within one single trading day – you won’t have any bitcoin market exposure overnight. So, you’ll avoid overnight funding charges on your position.

This strategy could be for you if you’re looking to profit from bitcoin’s short-term price movements, and it can enable you to make the most of daily volatility in bitcoin’s price.

Note that overnight funding is charged based on positions held at 10pm UK time. International times may vary.

Bitcoin swing trading is all about taking advantage of short-term price patterns, based on the assumption that prices never go in one direction in a trend. Instead, swing traders look to make money from both the up and down bitcoin movements that occur in a narrow timeframe.

This means that bitcoin swing traders tend to be more interested in small reversals in the crypto’s price. Swing traders will attempt to spot these reversals ahead of time, and trade to make profits from a collection of smaller market moves rather than a broad trend.

Scalping is a short-term trading strategy that takes small but frequent profits, focusing on achieving a high win rate. The theory is that you can just as easily build a big trading account by taking smaller profits time and time again, as you can by placing fewer trades and letting profits run. Scalping requires a very strict exit strategy as losses can very quickly counteract the profits – especially in volatile markets like bitcoin.

Most scalpers will close positions before the end of the day, because the smaller profit margins from each trade will quickly get eroded by overnight funding charges.

With bitcoin hedging, you’re attempting to reduce your risk in the short-term by hedging an existing position with a second, opposite position. In this way, you protect yourself from unfavourable movements in the bitcoin market.

For example, if you hold bitcoins but fear a short-term depreciation of the cryptocurrency, you’d open a short position. If the market price for bitcoin then actually falls, the profits from the second position would offset the losses from the first. Please remember that, although hedging could lessen your risk, you’ll still incur fees on both positions, which should be figured into all your calculations.

Automated bitcoin trading makes use of autonomous algorithms to open and close trades according to set rules, such as points of price movement. Once the bitcoin market conditions match the predetermined criteria, trading algorithms (algos) can execute a buy or sell order on your behalf.

With us, you’ll be able to trade on bitcoin algorithmically through partnerships we’ve established with respected platforms, including ProRealTime and MetaTrader 4, as well as our native APIs.

Make your first bitcoin trade.

When you trade bitcoin via CFDs, you’re using a leveraged derivative to speculate on bitcoin’s price movements and never take ownership of any real bitcoins. This means you can go long or short on the cryptocurrency, and the accuracy of your prediction and the size of the market movement will determine your profit or loss.

Once you’re ready to start trading bitcoin, follow these steps:

Open an IG CFD trading account Build a trading plan Do your research Manage your risk and place your trade Monitor and close your position.

Open a bitcoin CFD trading account.

Opening a CFD trading account is quick and easy. And, there’s no obligation to fund your account until you’re ready to trade.

To practise your bitcoin trading without risking your own capital, you can also try out our demo account. You’ll get $20,000 in virtual funds and can learn more about trading bitcoin markets on our award-winning platform 2 for free.

Here's a quick overview of trading CFDs on bitcoin.

CFDs Main advantages Trade rising and falling markets on margin without owning bitcoin Set up risk management tools like stop-loss orders Main risk Losses can exceed your margin deposit, so it’s important to manage your risk Available to All clients Traded in Over-the-counter contracts Commission There will be no commission charge for Bitcoin CFDs, and we charge spread instead 5 Trading platform Trading platforms Web platform, mobile app, third-party platforms like MT4 and ProRealTime.

Build a trading plan.

A trading plan is a comprehensive decision-making plan for your bitcoin trading activity. It helps you decide when and how much to trade, and should clearly indicate:

Your motivation for trading The time commitment you want to make Your trading goals Your attitude to risk Your available capital for trading Personal risk management rules The markets you want to trade Your strategies Steps for record keeping.

Do your research.

Bitcoin markets are notoriously volatile, and important news events could impact on them both heavily and quickly. It’s crucial to stay up to date on bitcoin news and any developing stories that could potentially cause market movements. To help you in this, our platform features expert analyses from our in-house team, in addition to a news feed.

Get the latest bitcoin news.

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Manage your risk and place your trade.

Because you’re opening your position on margin, your losses could exceed the margin deposit if the market moves against you. To help manage this risk, you can set a stop-loss level in the deal ticket. If triggered, the stop-loss will automatically close your position and cap your risk. 6.

To lock in profits if the market moves in your favour, you can also enter a limit level. Here, your trade will be automatically closed to secure positive returns as soon as the market reaches the price you’ve set.

Remember that, when trading CFDs, each contract will specify an amount per point of market movement. If the CFD is for $10 per point, and the underlying cryptocurrency price moves 10 points, your profit or loss – excluding costs – will be $100 per contract.

Once you’ve set the number of CFDs you want to trade, your stop-loss and limit levels, you’d open your position by clicking on ‘Place trade’.

Monitor and close your position.

Click on the ‘Positions’ tab on the left menu. Select ‘Close position’ and set the number of CFDs you’d like to close. Alternatively, open the market’s deal ticket and take the opposite position to one you have open – for example, if you bought CFDs to open, you’d now sell, and vice versa.

Open a bitcoin CFD trading account.

Seize opportunity on a market known for its volatility.

Deal on an award-winning trading platform and mobile app 2.

Get support when you need it with round-the-clock assistance from our customer service team, except on Saturdays from 6am to 4pm (UTC+8)

Trade with a FTSE 250-listed provider 7 with more than 45 years of experience.


Can I trade bitcoin on MetaTrader 4 platform?

Yes, you can trade CFDs on bitcoin via MetaTrader 4. If you already have an MT4 account but want to use our services, you’ll need to create a live account before you can trade with us.

After you’ve set up a live account with us, you’ll then need to set up and fund a live MT4 account before you can access our CFD offering. You can then log into your pre-existing MT4 platform with your IG credentials, which will preserve all of your chart data and analysis.

Do I need to use an exchange to trade bitcoin?

You need to use an exchange if you’re wanting to buy and own physical bitcoin. However, if you’re looking to speculate on bitcoin price movements without taking ownership of the cryptocurrency, then you can trade using derivative instruments.

With us, you can use our CFDs to take a position on bitcoin prices. Because CFDs are derivatives, you can trade both rising and falling markets. If you think the market will rise, you’d ‘go long’. If you think it’ll fall, you’d ‘go short’.

By comparison, if you buy and own bitcoin, you’ll only be able to profit if you sell the crypto for more than you originally paid for it.

That said, going short with a CFD is a high-risk way of trading because the market price of bitcoin can rise substantially – theoretically, without limit. This means that your losses on a short position could be unlimited.

Do I need a bitcoin wallet when trading with CFDs?

No, you won’t need a bitcoin wallet when trading with us. You also won’t have to open an account with an exchange.

When you trade on bitcoin via CFDs, you’re using derivatives to speculate on bitcoin’s price movements and never take ownership of bitcoins. This means you can go long or short on the cryptocurrency, and the accuracy of your prediction and the size of the market movement will determine your profit or loss.

However, please remember that CFDs are complex financial instruments that can accrue losses rapidly. Always make sure you understand how they work before trading, and consider whether you can afford the risk of potential monetary loss.

What are the bitcoin’s trading hours?

Bitcoin is traded 24 hours a day, seven days a week on exchanges around the world. However, some hours will see increased volatility and liquidity. This happens, for example, when the European, UK and US markets are all getting into their stride for the day. With us, you can trade on bitcoin CFDs 24 hours a day, except between 6am on Saturday morning (UTC+8) and Saturday at 4pm (UTC+8).

What is the minimum amount to start bitcoin trading?

The margin requirements on bitcoin CFDs are comparatively high – currently 50% margin but can be increased in times of market volatility. This means that cryptocurrency trading can be, relative to other markets, expensive.

To get a better idea of the costs of trading, consider opening a demo account. You’ll get $20,000 in virtual funds to trade not only bitcoin and other cryptos, but over 13,000 popular markets.

Should I trade on bitcoin with CFDs?

How you trade bitcoin is entirely up to you.

CFDs can be opened on margin. Here, you’ll pay a deposit that’s only a fraction of your total market exposure. So, at a margin deposit of 50%, if the total exposure for the trade is $1000, you’ll deposit $500. But, the profit and loss on the trade is calculated on the total exposure, not the deposit – meaning that your losses could far outweigh the deposit amount.

If you use a CFD to ‘go short’, the amount you risk is potentially unlimited because market prices can keep rising. You can manage your risk with CFDs, however, by making use of the stop-loss order on the deal ticket. Your position will be automatically closed on your behalf if the stop-loss is triggered. 6.

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1 Based on revenue (published financial statements, October 2022) 2 Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2022. 3 Correct as of 1 February 2022. Average speed calculated from 1 to 28 February 2022. 4 There may be transaction fees for other payment methods. 5 Other fees and charges may apply. 6 Stop-loss orders close your position automatically if the market moves against you. Normal stop-loss orders are free, but there’s no guarantee of protection against slippage. Guaranteed stops will close your position exactly at the price you specified, but incur a premium if triggered. Losses for both products can occur rapidly. 7 IG is part of IG Group Holdings Plc, a member of the FTSE 250.


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The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 75% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.

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Forex Palmas

What to Expect From the Final FOMC Meeting of 2022.

The final Federal Reserve monetary policy meeting of the year is this week, concluding after a two-day meeting on Wednesday the 14th with the statement released at 20:00 GMT.

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A press conference will follow shortly after with Fed Chair Jerome Powell where it’s hoped he will provide a positive insight into the outlook of the American monetary policy for next year.

50 Basis Points Hike Likely.

Economists are widely predicting that inflation has well passed its peak in the United States. This is great news for mortgage owners and borrowers, but there is still work to be done to ensure that numbers come back to target levels as soon as possible, according to the Fed.

Chair Jerome Powell, commented in a speech in late November, that the FOMC had made “substantial progress” in tightening policy and that the meeting in December may be the first opportunity to slow the size of rate rises.

As a result, a smaller increase to the Federal Reserve’s benchmark rate of 50 basis points is generally anticipated to be passed this Wednesday.

FedWatch Tool from the CME Group.

The Producer Price Index for November, which was issued last week, showed an annual growth rate of 7.4%, down from 8.1% in October. Also, if today’s CPI data is anything to go by, then inflation is certainly beginning to yield. It still remains unacceptably high, having fallen from 7.7% in October to 7.1% for November year-on-year, but this will give the Fed reassurance that rate hikes can begin to slow down.

The Fed has raised interest rates by 375 basis points since March this year, including four straight 75 bp increases at their most recent meetings. If the bank does increase rates by 50 basis points again this week, then it will be in the range of 4.25 percent to 4.5 percent, highs not seen since the close of 2007.


The US Economy Is Mostly Still Strong.

Despite the evident and rising danger of recession, the U.S. economy continues to demonstrate extraordinary strengths, notably in the labour market, as seen by the ongoing creation of jobs and stability in the unemployment rate in the most recently published employment data.

At the moment, such economic resilience is showing to be more of a burden than a gift. As with each indication of strength, it has become more difficult to control ongoing, widespread inflation without the Fed hiking interest rates to a point where a recession is unavoidable.

According to the most recent GDP data, the US economy expanded at an annualized pace of 2.9% in the third quarter, which was far more than economists had predicted.

The drag on the economy at this stage is the housing market. Existing home sales are projected to hover around their present levels until Q3 of next year, after being down for nine consecutive months to a 4.4 million annualized rate in October from over 6.5 million at the start of the year.

According to analysts polled by Reuters, housing prices rose up to 40% during the pandemic when people required more room inside their homes, but U.S. home values will continue to fall into 2023. They forecast a 12% decline from peak to trough, which is only about a third as severe as the previous market correction 15 years ago during the global financial crisis.

Recession Risks Remain.

Numerous variables determine if and when the economy enters a recession, but it will always involve growing unemployment and declining consumption.

CEO of JPMorgan Chase & Co, Jamie Dimon told CNBC recently that consumers and businesses are currently doing well, but that this may not persist for much longer due to the combination of a slowing economy and rising prices. He also believes that the Fed will raise the benchmark rate to 5%, but that still may not be enough to bring inflation back into the target range of 2% any time soon.

Powell, in his November speech, spoke of real GDP growth of 5.7% in 2021 being largely attributed to the economy’s ongoing recovery from the pandemic. GDP remained mostly steady for the first three quarters of this year as well, but according to Powell, the Fed has seen indicators that point to only a slight rise in the fourth quarter and probably only a small gain for the year as a result.

Several factors, including the waning effects of reopening and pandemic fiscal support, the global repercussions of Russia’s war against Ukraine, and the Fed’s monetary policy actions, which are impacting economic activity, especially in interest-sensitive industries like housing, could be responsible for this slowdown in expansion. The Fed believes that for a protracted period of time, the growth rate will need to be kept at a lower level.

Keep an eye out for further updates on the Fed’s decisions later on this week!


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Forex bitcoin 3


BTCUSD is the ticker symbol for Bitcoin and the United States dollar exchange rate. BTCUSD is a cryptocurrency CFD because of the presence of Bitcoin as the base currency.

Cryptocurrencies are known for their immense volatility, while the US dollar is by far the most traded fiat currency globally. As a result, BTCUSD is the most popular crypto-to-fiat pair, and it serves as the de facto gold standard for the cryptocurrency market; providing the price direction cue for virtually the entire crypto market.

In the BTCUSD pair, Bitcoin is the base currency, while the US dollar is the quote currency. When, for instance, the price of the BTCUSD pair is 10,000, it means that one would require 10,000 US dollars to acquire 1 Bitcoin.

When you trade Bitcoin, as opposed to investing in it, you are effectively speculating on the price movement, rather than buying the underlying asset. That means the entry cost implication can be much lower for a still decent exposure. The use of leverage further minimises the capital requirements, as your trading rewards may be multiplied up to 200 times, and your risk is also heightened.

At AvaTrade, you can trade the most popular Bitcoin pair in a safe environment with low margin requirements, competitive spreads, and zero fees, all on an intuitive and robust trading platform.

Bitcoin (BTC)

Launched in 2008, Bitcoin was the first and remains the most popular cryptocurrency. Unlike traditional fiat currencies, which are backed by trusted third parties such as banks and governments, cryptocurrencies are decentralised and backed by peer-to-peer technology. At the core of cryptocurrencies is the blockchain technology hat serves a secure and accurate public ledger of all transactions. By design, there will only ever be 21 million bitcoins, and as of the beginning of 2022, more than 85% of this amount had already been mined.

This scarcity has always fuelled the demand for Bitcoin, and it is one of the key reasons why its value started at a measly $0.003 in its early days and exploded to above 5-digits within a few years. The retail investing public took notice of Bitcoin in 2022 when it quickly accelerated above $10,000 and managed to print a then-high of just below $20,000. The 2022 massive rally was driven by increasing demand from retail traders who were keen not to miss out on the abnormal price gains which the primary cryptocurrency continually posted.

But after the 2022 rally, BTC then began a retracement and remained trapped below $10,000 for most of 2022 and 2022. There was cooling interest in cryptocurrencies in general, with traditional investments, such as stocks, proving to be more lucrative and safer as well. The year 2022 looked like a bubble, and the characteristic of cryptocurrencies as stores of value seemed to be largely an illusion. But 2022 changed the fortunes of cryptocurrencies yet again.

In a year that global economic activity was impacted by U.S.-China trade tensions, Brexit, and the coronavirus pandemic that swept across the world, Bitcoin emerged as a true store of digital value. The cryptocurrency rose from lows of below $5,000 in March and closed just below $30,000 by December 2022. The rally continued into 2021, with the coin printing an all-time high of circa $42,000 in January, at the time of writing.

There was a multitude of factors that created a perfect storm for BTCUSD during the year. First, in contrast to 2022 when retail money entered the crypto space, in 2022 it was big, institutional money flowing into the scene. Several big companies, such as Visa and PayPal, announced massive entry into crypto, and some major central banks, as well as hedge funds, also produced positive headlines for the crypto market. Tesla set a new trend by buying $1.5b worth of Bitcoin with its cash reserves, rather than falling foul to holding cash reserves that could bring limited returns. The EV maker also started accepting it as a payment method.

BTC/USD also benefitted immensely from the weakness of the U.S. dollar as the Federal Reserve announced massive stimulus packages that were designed to curb the negative economic impacts of COVID-19 lockdown restrictions implemented by the government. Also, there was the May 2022 Bitcoin halving event that reduced the incentive to mine Bitcoin, further limiting the supply of the cryptocurrency. After hitting the $42,000 mark, BTC-USD pulled back to settle above $30,000 as of February 2021. The correction was largely attributed to profit-taking, as well as some negative comments on the use of cryptocurrencies by U.S. Treasury Secretary, Janet Yellen.

United States Dollar (USD)

Also known as the ‘greenback’, the US dollar is the greatest reserve held currency in the world. The USD is also the denominator for major commodities such as gold, silver and crude oil in the global markets. As the official currency of the United States, also the world’s largest economy, the USD is the most stable and liquid currency in the world that has rightly earned the title ‘king of currencies’.

Major Bodies influencing the BTCUSD.

The genesis of Bitcoin came during the 2008 global financial crisis, and initially, crypto was touted as the future of money, essentially as an alternative to fiat. Based on this, the major influential body that can impact the BTCUSD pair is the U.S. Federal Reserve, which has the mandate over the most powerful fiat currency, the USD. The Fed releases rate decisions 8 times a year, and these are important events for the BTCUSD price.

A rate hike would pressure the BTCUSD price lower, while any rate cut would provide tailwinds for the crypto pair. To put this into perspective, in November 2022, the BTCUSD pair (Bitcoin Index) traded at $3,778. Mainstream adoption of Bitcoin caused the December 2022 peak of just below $20,000. But as major regulatory bodies sought to impose strict rules governing the space, the crypto party has faced challenging times. Regulation will continue to be a mixed pill for Bitcoin and other cryptocurrencies. Good headlines will push the BTCUSD price higher, while bad headlines will pressure it lower.

In addition to other fundamentals, the 2022 BTCUSD rally, as well as the subsequent 2021 pullback, can also be attributed to the positive/negative media coverage that the cryptocurrency scene has experienced with regards to regulation. Regulators, such as the US SEC, are capable of literally deciding the fate of any underlying crypto coin or token. A case in point is a lawsuit filed by the SEC against Ripple Labs, custodians of Ripple (XRP), one of the world’s biggest and most popular cryptocurrencies.

The case which challenged XRP’s classification as a financial security (an asset that can be bought by investors for profit) rather than a currency (an asset to be used as a medium of exchange) saw the cryptocurrency’s value plunge dramatically. The suit even led to major crypto exchanges delisting Ripple from their platforms. Going forward, cryptocurrency investors will particularly be buoyed by flexible, principle-based, and collaborative regulation efforts by the relevant agencies. This will likely create an environment where the adoption and circulation of Bitcoin will be enhanced.

There is a realistic expectation of this happening with major institutions now among the big players in cryptocurrencies as well as the underlying blockchain technology. If major regulators design regulations that will not cripple or limit technology and innovation in cryptocurrencies, it is expected that BTCUSD will be the crypto pair that will best display the market’s optimism.

On the other hand, any regulation that will cause friction with the idea of decentralisation and blockchain will see investors express pessimism in the value of BTCUSD. This has partly been observed when Bitcoin retraced during the start of 2021. Amid positive fundamentals for Bitcoin, investors expressed fear and anxiety when US Treasury Secretary, Janet Yellen, made comments suggesting to lawmakers that they need to ‘curtail’ the use of cryptocurrencies because they are ‘mainly’ used in ‘illegal activities’ such as the financing of terrorism.

BTCUSD trading is known to be very volatile, and such comments from a senior US administrator can always cause jitters among investors. The major regulatory bodies for BTCUSD traders to watch out for are: U.S.’s SEC (U.S. Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission); China’s CSRC (China Securities Regulatory Commission); EU’s ESMA (European Securities and Markets Authority); UK’s FCA (Financial Conduct Authority); and South Korea’s FSS (Financial Supervisory Service).

BTCUSD in 2021.

The year 2021 has been a whirlwind for the flagship cryptocurrency, Bitcoin. The pairing, BTCUSD started the year with strong momentum, having already broken above the 2022 highs. The bullish pressure sustained for the entire first quarter of 2021, and Bitcoin managed to print its all-time high of around $65,000. Various analysts and experts started making Bitcoin price predictions of $100,000, $200,000, and even $500,000, but the coin faced massive headwinds and lost over 50% of its value to settle just above $30,000 in May 2021.

Institutional Money.

After accelerating the bull run in early 2021, institutional money is expected to continue being a major price driver in 2021. Major companies, such as Tesla and MicroStrategy Incorporated, invested big money in Bitcoin, paving the way for other corporations to rethink their cryptocurrency strategy. With the price at ‘favourable’ levels, BTCUSD is due for another round of heavy backers – something that would be a major tailwind for the digital currency’s price.

Bitcoin ETF.

While institutional money is a major positive for cryptocurrencies, the launch of a Bitcoin ETF would go a long way in rubberstamping its legitimacy. Investors were confident that 2021 would be the year that a Bitcoin ETF would finally start trading, but the SEC has routinely frustrated several proposals to launch one. The SEC has cited the unregulated nature of the coin as the major reason for not approving any Bitcoin ETF. A Bitcoin ETF would allow investors to conveniently buy and sell the digital currency and integrate the coin easily into their portfolios. Nonetheless, there already exists an ETF for crypto mining and mining infrastructure companies trading on the NYSE; investors can only be hopeful a true Bitcoin ETF is on the way.


Regulation continues to cast a huge shadow over Bitcoin in 2021. In particular, China has been consistent in its aggression towards cryptocurrency. The country instituted a ban on financial institutions and payment services companies offering crypto-related services and even made some mass arrests on people using cryptocurrencies in controversial ways. China is a significant country for Bitcoin, with almost 50% of miners domiciled there. The recent crackdown dented Bitcoin’s infrastructure, which subsequently weighed heavily on the price of the coin. But it is not only negative regulation that is making headlines. There have been positive headlines hitting the wires too – the US levies capital gains tax on cryptocurrencies, which implies a positive step. Many crypto exchanges have already implemented KYC procedures to curb money-laundering and other illegal activities, while there are still some European countries considered to be favourable for cryptocurrencies, including Germany, where the European Central Bank is domiciled.

Beyond fundamentals, BTCUSD also has an interesting technical picture worth a look at. At just above $30,000, Bitcoin has already done a 50% retracement off its all-time highs, with that level also being a 1.618 Fibonacci extension of the previous cycle that peaked in late 2022. The price has also been consolidating in the $30,000-$40,000 price range for a while now, and it is only a bit realistic to anticipate a breakout soon. Volatility will likely come sooner rather than later in either direction.

BTCUSD Correlation.

As stated, earlier Bitcoin provides the price direction cue for almost all cryptocurrencies. Therefore, the BTCUSD has a positive correlation with all the major crypto pairs, such as ETHUSD, BTGUSD, LTCUSD, ETCUSD and XRPUSD. There is also an interesting correlation with gold. Gold has, for years, been considered a safe haven and a hedge against inflation and fiat – qualities that Bitcoin now portrays. Bitcoin is now effectively the digital gold. Additionally, the price of gold is measured in USD, something shared by the BTCUSD pair. By sharing fundamental economic qualities, gold and Bitcoin have developed a positive correlation that traders should always consider.

BTC/USD Trading Main FAQs.

What currency pair does the ticker BTC/USD refer to?

Currency traders are familiar with the major currency pairs, and often a good number of the minor pairs. More experienced traders are also likely familiar with a number of exotic pairs as well. But the BTC/USD pair is something of a mystery to currency traders, and that’s because one of the components isn’t a traditional fiat currency. BTC/USD refers to the pairing of the leading cryptocurrency Bitcoin with the U.S. dollar. It’s a very new currency pair, and one that has generated much excitement over the past decade. If you aren’t familiar with BTC/USD you should take some time to learn about it now.

Why should I trade BTC/USD?

As the largest cryptocurrency by far Bitcoin should be of great interest to currency traders. While the size of the digital currency’s market capitalization pales in comparison with that of any major or minor fiat currency, Bitcoin acceptance has been growing. As the acceptance of Bitcoin grows it becomes more commonplace as a currency, a store of value, and as a trading asset. This will only increase in the future, so by learning to trade BTC/USD now you are future-proofing your trading career. Plus cryptocurrencies like Bitcoin are one of the few markets available for trading on the weekend.

What is the best strategy for trading BTC/USD?

Any of the excellent strategies you’re using for forex trading will also work when trading BTC/USD. One very excellent strategy uses the On-Balance Volume (OBV) indicator to trade Bitcoin. This indicator uses a combination of price action and trading volume to analyze the market. Originally developed for the stock markets it has also been used successfully in forex trading. It also uses a comparison with Ethereum, the second largest cryptocurrency. Basically it looks for divergences between price action in Bitcoin and Ethereum, such as a breakout in one, but not the other. A breakout in Ethereum first indicates the same will be coming for Bitcoin, and the OBV is used to confirm that. If the OBV is headed higher that’s the confirmation. A limit order can then be placed just above the BTC/USD resistance level.

Trading BTCUSD with AvaTrade.

AvaTrade offers a wide variety of benefits when trading the BTCUSD pair:

With AvaTrade, you do not need to create a wallet to trade cryptocurrency. With the BTCUSD pair, you can trade cryptos against fiat currencies. Unlike exchanges, where you are restricted to trade only crypto-to-crypto. Since you are trading crypto CFDs and not actually purchasing the digital currency, you can profit from both rising and falling markets.

Open an account with AvaTrade now & enjoy the many benefits crypto trading has to offer!

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Forex bitcoin 1

Benefits and Risks of Trading Forex With Bitcoin.

Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2022.

Updated October 10, 2022.

Reviewed by.

Reviewed by Somer Anderson.

​Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas.

The forex market is the largest and most liquid market in the world. It's a truly global currency market, open 24 hours a day, seven days a week, everywhere.

As if forex was not dynamic enough, cryptocurrencies like bitcoin have added a fascinating new dimension to currency trading. In recent years, many forex brokers have begun to accept bitcoins for currency trading, with some accepting a variety of other digital currencies as well.

Should you jump in and begin using your hard-mined bitcoins in the forex markets? Find out the risks and benefits first.

Key Takeaways.

The forex market is dedicated to trading in the world's currencies. Many forex brokers now accept bitcoin and other cryptocurrencies. Bitcoin trades benefit from the anonymity and decentralized valuation system the currency represents. They add a new layer of risk to forex trading, exacerbated by the extreme volatility of crypto-currencies.

A Standard Forex Trade.

Before you consider whether to trade forex using bitcoin, it's helpful to understand how a conventional forex trade works.

A forex trade is simply an exchange of one currency for another at its current rate. Unlike tourists who exchange their home currency for local spending money, forex traders are trying to make money off the continual fluctuations in the real value of one currency against another.

Trading a 'Pair'

Imagine you are an American trader betting that the British pound will lose value compared to the U.S. dollar. This is called trading on the British pound/U.S. dollar currency pair (GBP/USD).

You deposit $100 with a forex broker. Assuming the rate of $1 = £0.5, you will receive £50 for your $100. If the GBP/USD rate changes to 0.45, you close the position to 50/0.45 = $111.11. That is, you make an 11.11% profit over your initial $100 deposit.

Most forex trading is conducted in a decentralized fashion via over-the-counter markets. However, the fact that the forex market is decentralized and that bitcoin is considered to be a decentralized digital currency does not mean that the two are equivalent.

The Impact of Decentralization.

The key distinction is that, though forex exchanges might be decentralized, the currencies themselves are backed by central banks in the countries that issue them. It's the job of those banks to stabilize the value of their currencies and keep them stable.

Bitcoin and most other cryptocurrencies do not have that support.

A Forex Trade Using Bitcoin.

Now consider an example of a forex trade using bitcoin. First, you open a forex trading account with a broker who accepts bitcoins. These include AvaTrade,   eToro, and LiteForex.   You then transfer 2 bitcoins from your digital wallet to the forex broker’s digital wallet.

If you want to trade using bitcoin, use only a locally regulated forex brokerage. And avoid using leverage until you know what you're doing.

Assuming the current bitcoin to U.S. dollar rate is 1 bitcoin = $7,500, your deposit of 2 bitcoins is worth $15,000. Now, assume that you want to take a position in British pounds. If the exchange rate is £0.5 = $1, you will receive £7,500. After some time, the GBP/USD rate changes to 0.45, and you square off your position to get $1,666.65 in your trading account. You have made a tidy 11.11% profit and you are ready to cash out.

The Bitcoin Effect.

However, suppose that the bitcoin to U.S. dollar rate has changed during this period of time to 1 bitcoin = $8,500. When you withdraw your money in bitcoins, you receive ($16,666.65/$8,500) = 1.961 bitcoins.


The range in value of a bitcoin over the year ending in July 2022.

Despite the fact that your bet on British pounds earned you an 11.11% profit (from $15,000 to $16,666.65), the fluctuation in the bitcoin to U.S. dollar rate means that you sustain a loss of 0.039 bitcoin or about -2.%. (Initial deposit of 2 bitcoins — 1.961 bitcoins = .039 bitcoin).

However, had the bitcoin to U.S. dollar exchange rate changed to 1 bitcoin = $7,000, you would realize a profit from both the forex trade and the bitcoin exchange. You would have received ($16,666.65/$7,000) = 2.381 bitcoins, a profit of 19.1%.

Increased Unpredictability.

This hypothetical example illustrates the big reason to exercise caution when using digital currencies for forex trading. Even the most popular and widely used cryptocurrency, the bitcoin, is highly volatile compared to most traditional currencies.

In the year ending July 24, 2022, the value of a bitcoin ranged from $5,532 to $11,982.

This unpredictability means that the risks associated with trading forex using bitcoin are that much greater.

Beyond the exchange rate fluctuations impacting profit and loss, there are other benefits and risks to consider before trading forex with bitcoin.

Benefits of Trading Forex With Bitcoin.

Decentralized Valuations : A major advantage of trading forex with the bitcoin is that the bitcoin is not tied to a central bank. Digital currencies are free from central geopolitical influence and from macroeconomic issues like country-specific inflation or interest rates. High Leverage : Many forex brokers offer leverage for bitcoin trades. Experienced traders can use this to their benefit. However, such high margins should also be approached with great caution as they magnify the potential for losses. Low Deposit Amount : A trader can start with as little as $25 with some bitcoin forex trading firms. A few forex trading firms have even offered promotions like a matching deposit amount. Traders should check that the broker is legitimate and appropriately regulated. Low Cost of Trading : Most forex brokers that accept cryptocurrency are keeping brokerage costs very low to attract new clients. Security : You don’t need to reveal your bank account or credit card details to make a bitcoin transaction. This is a big advantage in terms of cost and financial security. No Global Boundaries : Bitcoin transactions have no global boundaries. A trader based in South Africa can trade forex through a broker based in the United Kingdom. Regulatory challenges may remain a concern, but if both traders and brokers are willing to transact, there are no geographical boundaries.

Risks of Trading Forex with Bitcoin.

Different Exchange Rates : Bitcoin trades on multiple exchanges and exchange rates vary. Traders must ensure they understand which bitcoin exchange rates the forex broker will be using. U.S. Dollar Rate Risk : While receiving bitcoin deposits from clients, almost all brokers instantly sell the bitcoins and hold the amount in U.S. dollars. Even if a trader does not take a forex trade position immediately after the deposit, they are still exposed to the bitcoin-to-U.S. dollar rate risk from deposit to withdrawal. Danger of Volatility : Historically, bitcoin prices have exhibited high volatility. In the absence of regulations, volatility can be used by unregulated brokers to their advantage and a trader’s disadvantage. For example, assume the intraday bitcoin rate fluctuates from $5,000 to $5,300 U.S. dollars per bitcoin. For an incoming deposit of 2 bitcoins, the unregulated broker may apply the lowest rates to credit the trader $10,000 (2 bitcoins * $5,000 = $10,000). However, once the trader is ready to make a withdrawal, the broker may use the lowest exchange rate. Instead of the original 2 bitcoins deposited, the trader receives only 1.88679 bitcoins ($10,000/$5,300 = 1.88679 bitcoins). The unregulated broker may be exchanging bitcoins and dollars at, say, $5,150, and pocketing the difference at the expense of the client. Security Risks Inherent to Bitcoin : Deposited bitcoins are prone to theft by hacking, even from a broker’s digital wallet. To reduce this risk, look for a broker who has insurance protection against theft. Risk of Leverage : Using leverage is risky for new traders who may not understand the exposure. This risk is not unique to cryptocurrency forex trading and comes into play in traditional forex transactions as well. Asset Class Mixing : Cryptocurrency is a different asset class altogether and has its own valuation mechanism. Trading forex with bitcoins essentially introduces a new intermediate currency which can impact profit and loss in unexpected ways. Any money that is not locked down in a trader’s base currency is a risk.

The Bottom Line.

Although cryptocurrencies like bitcoin are gaining popularity, there are still many associated risks. In forex trading, dealing in a decentralized currency that offers global transactions with no fees is an advantage. But the tradeoff is essentially adding a third currency to what was a trading pair.

Traders who want to take on that risk should use only a locally regulated forex brokerage.