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More than 6.6 million Americans filed for unemployment benefits amid the ongoing COVID-19 crisis. Coronavirus is having a big impact on countries’ economies all around the globe. After the pandemic, some economy experts are expecting an economic slowdown or worse a recession that we could face. The cryptocurrencies felt the impact also with bitcoin going down in a big margin.
Anyhow, we should not get discouraged so let’s keep fighting.
How does trading forex with bitcoin work?
You can learn how to trade. It can be challenging but it is not rocket science. There are a couple of forms of trading. Traders pick the one they prefer or the one they are more successful at. Some forex brokers who are looking to expand their offerings have seen bitcoin as an alternative investment. Also, the trading of bitcoin is not based on the macroeconomics of a nation like the traditional currency but it is rather based on a broader reaction to changes in the global economy.
Furthermore, some forex brokers state that individuals can deposit, withdraw or trade on a bitcoin-based account. Another way could be by including bitcoin trading into brokers platforms. But it will look like they are just allowing users to buy and sell bitcoin through existing bitcoin exchanges since they are not bitcoin-based.
According to Bitcointy.org, 78% of overall bitcoin trading volume is happening on exchanges like OKCoin, Huobi or BTC China, which are China-based exchanges. Furthermore, bitcoin is already used by many forex companies. The cryptocurrency could be used as a counterpart in a currency pair and could be traded in the forex market.
Should you start using your bitcoin in the forex markets - What could be the risks and benefits?
Well, it could be a double-edged sword. But, let’s take a look at the advantages first:
Less deposit amount: This means that you could start with as low as $25 with some bitcoin forex trading companies. There are actually prior special promotions offered for new members offering them a matching deposit amount.
Decentralized valuations: This is the one traders love the most - the fact that bitcoin has decentralized nature. There is no central bank that could change bitcoin valuations so bitcoin is free from macroeconomic issues like interest rates or inflation.
Security: Many people usually fear to expose their bank account information. Well, with bitcoin transactions this is not required. You don’t need a bank account or credit card details to withdraw or deposit money.
High Leverage: When it comes to bitcoin trades, some forex brokers offer leverage. Now, if you are a beginner you might not know exactly how to profit from this advantage, but for experienced traders, it is the greatest thing since sliced bread.
Now, let’s take a look at the disadvantages:
It is a new intermediate currency: Cryptocurrency has its own valuation mechanism. Money should be locked down in a trader’s base currency to avoid any risks.
Theft: There is a chance that deposited bitcoins could be stolen by hacking even from the brokers’ digital wallet. But, look for brokers who have insurance protection against theft. Leave no stone unturned!
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.