Crypto Daily Topic

The Upsides and Downsides of Trading Forex with Bitcoin

Forex trading and cryptocurrency trading are the most popular investments for the modern investor. Forex trading, in particular, is the largest trading market in the globe – operating every single hour of every single day.  Cryptocurrencies, which have become uber-popular in less than a decade, have injected a very interesting dimension to the investment landscape. 

Now, forex brokers are embracing Bitcoin – the largest and most successful crypto, as a trading pair, as well as other cryptocurrencies. But before you decide to throw your hard-earned Bitcoin in the pool, let’s first find out what you need to know. 


The Upsides 

#1. No centralized control:  When you’re trading forex with Bitcoin, you know it’s not controlled by any single entity – state or otherwise. Cryptocurrency is free from any sort of centralized control, as well as macroeconomic factors such as inflation and interest rates. 

#2. High leverages: Most forex brokers now offer quite generous margins for bitcoin trades. If you’re an experienced trader, you can capitalize on such margins for potentially more lucrative trades. Bear in mind, though that with margin trading, the potential loss is of the same magnitude as the potential profit. This means you should exercise great caution with high margin trading. 

#3. Affordable deposit amounts: Some forex trading platforms allow you to deposit as little as $25 to start trading forex with Bitcoin. Other platforms even match your initial deposit amount. As a trader, you can take advantage of these offers. However, make sure the trading firm is legit before you deposit money.

#4. Low trading costs: In order to attract more crypto users to the fold, forex trading platforms are charging very tiny amounts of fees. 

#5. Security and privacy: Unlike with traditional money, when trading with Bitcoin, you can keep your financial info like debit/credit card details private. 

#6. No geopolitical boundaries: Bitcoin transactions transcend all boundaries. A trader in Nigeria can trade forex via a broker based in Australia – as long as both parties are willing to transact. 

The  Downsides

While trading forex with Bitcoin has several bright sides, it also has not-so-bright ones. 

#1. Varying exchange rates: Different exchanges feature different exchange rates for Bitcoin. Ensure that you know which Bitcoin exchange rate your would-be broker uses. 

#2. U.S. dollar exchange rate: Due to the volatility of Bitcoin, forex brokers usually exchange Bitcoin deposits for U.S. dollars immediately. Even if you don’t enter a trade as soon as you deposit Bitcoin, you’re still exposed to any losses that may occur from the exchange process. 

#3. Volatility: Bitcoin is infamously volatile. And due to the lack of regulation in the Bitcoin market, rogue forex brokers can manipulate this volatility to their advantage and to the trader’s disadvantage. 

#4. Security Risks: Bitcoin and other cryptos are usually high targets for sophisticated hackers. No single online storage is safe enough – and that includes exchanges and your broker’s Bitcoin wallet. For this reason, you want to use a forex broker that has insurance against theft/loss of funds. 

#5. Risk of Loss Through Leverage: The risk of losing money via leverage trading is always there. If you’re a beginner forex with Bitcoin trader, you ought to watch out for this risk.

Mixing Asset Types: Bitcoin belongs to a wildly disparate asset class from the ones traditionally found in Forex trading. How Bitcoin is assigned value is also different. Trading forex with Bitcoin introduces a new dynamic that could trigger both loss and profits in unexpected ways. 

Closing Thoughts

Bitcoin is gaining traction in entirely new frontiers. One of these is forex trading – which both brokers and traders seek to capitalize on Bitcoin’s best. This article should help you navigate the contours of trading forex with Bitcoin more successfully.


By Edith M.

Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, commodities, forex, indices, bonds, and cryptocurrency investments.

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