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What will happen to the forex market next year, and how will it compare to the cryptocurrency market? Find out all you need to know.
In the world of finance, there is no shortage of options when it comes to investing your money from stocks and bonds to commodities and currency. But what about crypto? Cryptocurrency has been on the rise since its inception over a decade ago. Experts predict that forex trading and crypto will be the two major forces of currency exchange in the coming years. While they are similar in some ways, some key differences could make all the difference in your investments. So what can we expect from these two currencies in 2023? Let’s take a closer look!
Forex vs Crypto Market: Overview
Forex
The forex market (also known as FX) is a decentralized global market for trading different currencies. Forex trading allows individuals or companies to trade foreign currencies by buying and selling currency pairs online. It has been around since the 1970s and has grown in popularity ever since. This type of trading is driven by economic news and data releases, so it’s important to stay up-to-date with current events and know how they might affect the exchange rate of a particular currency. With low transaction costs and high liquidity, forex is excellent for those looking to diversify their portfolios with foreign investment.
Crypto
Recent years have seen the emergence of cryptocurrency as a viable option for investors looking to profit. Cryptocurrency is digital money that uses cryptography to safeguard transactions and regulate the generation of new units. It is decentralized, meaning no government or financial institution is regulating it. This lack of regulation means that cryptocurrency prices can be volatile, making them attractive investments for those willing to invest their money. As more companies accept cryptocurrency as payment, its value will likely increase in 2023. We can also expect an increase in new coins entering the market and the continued development of existing ones.
The trend so far in 2022
This year was supposed to offer relief and economic recovery after the past challenging years, but it has disappointed high hopes. It’s been full of international crises, rising prices, sky-high inflation, and worries about a worldwide economic downturn.
The Federal Reserve has raised interest rates many times and will continue to do so until they reach a level of 4.25%, 4.5%, or 5% before the year is over. The financial markets have been unstable, with affluent corporations declaring bankruptcy and certain fiat and digital currencies falling to previously unheard-of depths.
This year has been a wild trip for the cryptocurrency sector as it lost more than $1.4 trillion in value due to various issues, including failing projects and a liquidity crisis. The industry suffered its most severe hit in November when FTX, a once-reliable exchange, declared bankruptcy. Following its collapse, several digital currencies suffered damage.
This year, the currency market did not fare any better. Despite relative stability this year for the US dollar, other currencies will look back on 2022 as a dismal period in their histories. The ongoing conflict in Ukraine and rising costs for commodities and food have irreversibly pushed Europe’s shared currency lower. Even yet, it fell twice to its lowest points in twenty years.
The British pound has also suffered this year due to geopolitical and economic unrest. The GBP reached a low of $1.03 at the end of September, sparking expectations that it would fall to parity with the US dollar.
Is investing in Forex and Crypto worthwhile in 2023?
The answer to this question is a firm “yes.” Investors could mix long and short volatility strategies that aim to take advantage of supply and demand mismatches when the cryptocurrency and currency markets are swinging. Volatility can be an ally rather than an enemy in certain situations. Investors need to know what trading strategies to use during times of volatility so they can find these opportunities for financial growth that come with volatility. Trading forex has an added advantage: you can easily profit from falling markets because currencies are traded in pairs.
Bottom line
So, where will the money flow in 2023? The truth is both forex trading and cryptocurrency are here to stay. While cryptocurrency may have taken off like wildfire in recent years, forex remains popular due to its stability and ease of use compared to other forms of investment.
Over the last forty years, the value of the foreign currency market has gradually increased. It gradually grew with the implementation of flexible exchange rates in the 1970s, rising from $5 billion in 1977 to more than $2.5 quadrillion today.
Foreign exchange has evolved over the last several years from a mostly unknown and inaccessible financial instrument to a widespread phenomenon. It is anticipated that the global FX market will keep growing. Consequently, the industry’s 40-year increasing trend will likely continue for some time. Each market has advantages for investors looking for opportunities for growth and profit. Whether you’re an experienced trader who prefers the reliability of forex or you’re just getting started with cryptocurrencies, you can rest assured knowing that there’s plenty of potential out there waiting for you! No matter your direction, doing your research will help ensure you make the most informed decision possible when investing your hard-earned dollars.
