Benefits and Risks of Trading Forex With Bitcoin

Forex is the largest global financial trading market and the most liquid one. In plain terms, this is where currency pairs are traded daily, meaning that the FX market is open 24/5 for everyone, everywhere.

Already abundant in world currencies, forex has also become the place of business for trading cryptocurrencies. Cryptos like Bitcoin and Ethereum added an extra boost to the FX market, attracting a new kind of trading-oriented audience.

Over the past few years, forex brokers have adopted the new trend of accepting Bitcoin for cryptocurrency trading. Plus, more are coming to terms with using other digital currencies.

For everyone interested in forex trading with Bitcoin, we have compiled a useful review of the most common benefits and risks associated with Bitcoin and trading on the currency exchanges.

Table of Contents

What Do You Get When Trading Forex With Bitcoin?

If you’re looking to test the waters of trading on the forex market with Bitcoin, first find and compare the best forex brokers online and get first-hand insight into the tips and tricks of making money with crypto.

Although Bitcoin is not deemed a legal currency, considering that many countries have yet to legalize and acknowledge the coin, there is a chance for you to trade on forex using Bitcoin. The process is the same as buying/selling with any other currency pair on the market.

The difference comes in some pros that you can experience with it. However, we can’t just rely on the positive sides and discard the negative ones that these trades may bring. Following are both benefits and risks of trading with currencies and Bitcoin simultaneously.

Benefits of Bitcoin Trading on Forex

Let’s first start with the perks of trading on the forex market with Bitcoin. Those are:

Bitcoin is a decentralized asset: One of the biggest perks of trading forex with Bitcoin is that any central bank controls the digital asset in no way. The good thing about digital currencies is that they are not affected by the geopolitical influence of macroeconomic aftermaths such as inflation or skyrocketing interest rates.
Bitcoin is highly leveraged: Most forex brokers leverage Bitcoin trades pretty high. Seasoned traders know how to use this practice and turn the tables by making a profit. Still, high margins mean a few windows for losses are open, too.
Low deposit requirements: Part of the beauty of forex trading with Bitcoin is that traders can start with as little as $25 – the minimum deposit amount required by some Bitcoin forex trading agencies. Plus, some trading companies will offer exclusive deals for Bitcoin trading.
Worldwide access: Trading with Bitcoin gives investors all the freedom in the world – no one is bound to be at a certain location to make a Bitcoin transaction. For instance, a trader in New Zealand can trade on the FX market with Bitcoin via a broker in France. Although certain regulations might apply, trading has no physical or geographical boundaries.

Risks of Bitcoin Trading on Forex

As mentioned, the perks are not the only thing you should consider if you plan to trade currencies with Bitcoin. Here are four of the most common risks associated with forex trading with Bitcoin:

Increased volatility: In the historical context, Bitcoin has been deemed highly volatile. When dealt with by unregulated brokers, traders can suffer great losses to the advantage of the brokers themselves.
Discrepant exchange fees: Different exchanges and exchange rates apply to digital currencies. Inexperienced traders should know which exchange rates the broker uses to minimize losses.
Security issues: Many traders are reluctant to trade forex with Bitcoin due to security breaches. It’s not rare for deposited Bitcoins to be subjected to theft via hacking. To stay safe, choose a broker with insurance for cyber theft.
Leverage risk: Even in plain forex trading, the risk of leverage is always present. This is even more so when adding cryptocurrency, considering Bitcoin’s volatility and lack of regulation.
Differences in values: Bitcoin and regular currencies don’t value the same. They are different assets, which is why they carry different valuation mechanisms. For this reason, you should always expect a possible win or loss in the transaction.