An economic stimulus is to be introduced in 2021 in support of the US economy. Correspondingly, there’s been a rise in institutional demand for Bitcoin as inflation fears mount. The reigning king of cryptocurrency is a great way to store and sustain value and hedge against market risk. For example, Bloomberg reported that a major insurance provider had bought BTC worth a whopping $100 million in December of last year. Major banks, reputable Forex brokers, and institutional investors all draw parallels between Bitcoin and precious metals. Supply of the crypto is capped at 21 million coins, making it immune to inflation. Demand for it is growing worldwide as PayPal and other payment processors begin to allow customers to use Bitcoin for daily purchases.
You can even invest in Bitcoin and other cryptocurrencies as part of a retirement strategy. Here’s a bit more information about that.
Bitcoin for Retirement
You can have Bitcoin in a self-directed IRA. Retirement accounts’ longer-term nature makes them perfect for BTC and other crypto assets. What’s more, Bitcoin’s price is expected to keep increasing. Bitcoin’s built-in scarcity and deflation, coupled with its growing adoption as a currency, creates an environment fostering the growth of its value. This makes Bitcoin the perfect investment vehicle for your retirement.
Pros of Trading Bitcoin on Forex
No market in the world is bigger and has more potential than forex. It’s open everywhere, 24/7. According to experts, Bitcoin and other cryptocurrencies have lent currency exchange a remarkable new aspect. Many prominent brokers are taking Bitcoin to carry out trades. Among the benefits of this type of trade are decentralized valuations, security, high leverage, and low trading cost. Perhaps the biggest plus is the affordable trading amount. You don’t need more than $20 to begin trading with many forex brokers that accept Bitcoin.
Among the extras, some companies offer amounts to match your deposit. Always work with properly licensed and regulated brokers. If you are a US citizen you make sure you choose Etoro or IG broker, because Forex.com does not provide any Crypto trading. To carry out a trade with BTC, you don’t need to provide any debit or credit card information or even bank details. This is a big plus with respect to financial safety and cost savings.
Leverage is offered by many forex brokers. This is something experienced investors can use to their advantage. Do keep in mind that you should approach high margins with caution because they augment loss potential too.
Finally, many brokers that take Bitcoin maintain low brokerage fees to draw attention to their services.
Cons of Trading Bitcoin on Forex
The biggest risk of trading Bitcoin on forex involves keeping deposits in USD. Almost all brokers sell the Bitcoin deposits they get from their customers at once and hold the respective sum. As a trader, you are vulnerable to the exchange rate risk between deposits and withdrawals even if you don’t adopt a position right after funding your account with the broker.
Exchange rates differ from platform to platform, and there are many BTC exchanges. Investors must make sure they know what rates their broker is applying.
Bitcoin prices have historically been unpredictable. Unlicensed brokers can use volatility to your disadvantage and their advantage. All brokers will typically apply high exchange rates on incoming deposits and low ones on withdrawals, keeping the difference. Once again, we come back to the importance of knowing the rates they are applying and only working with regulated ones.
There is also the risk of leverage to reckon with. It can work in your favor, but it can work against you. Inexperienced traders will find leverage particularly risky because they don’t grasp the exposure well enough. Conventional forex transactions also come with this risk. However, some risks are purely inherent to BTC. Even a digital wallet (albeit with difficulty) can be hacked. If this happens, you lose the bitcoins you’ve deposited. Always ask your broker of choice if they’re insured against theft.
Final Thoughts
Cryptocurrency has unique mechanisms of valuation, being in an asset class of its own. In essence, trading BTC on forex introduces a new interim currency, which can have a totally random and unplanned effect on profit and loss. Despite the risks, there’s no end to the popularity of cryptocurrencies like Bitcoin insight. Trading a decentralized currency on forex that comes with international transactions without any fees is definitely a big plus.
Featured image: TheIndependent