THE EQONEX CRYPTO GUIDE AND LEARN HUB
Listicles

5 Reasons Fiat Traders Are Moving to Crypto

March 3, 2022

Christina

5 Reasons Fiat Traders Are Moving to Crypto

With rising institutional adoption from the likes of JPMorgan, BNY Mellon, KPMG, and countless others, cryptocurrencies have established themselves as a viable alternative asset class.

With so much depth and diversity, they have also proven to provide many opportunities for investing and trading, with an increasing number of traditional traders turning their hands to crypto.

recent report by Acuiti found that proprietary trading firms are expected to exit the forex market in droves this year amid uncertain monetary policy. Of those firms surveyed, just 12% stated that they saw "big potential" in this asset class, while over one-third indicated that they saw "very little potential" for profits in 2022.

On the flip side, crypto markets are hotting up, with many proprietary trading firms citing "huge potential" in the year ahead despite the rocky start to 2022. That places the crypto markets up there with equities and interest rates as the markets to watch. Let's take a look at some of the reasons crypto trading is becoming so attractive. 

FX market inefficiencies

Despite the massive leaps that cryptocurrency has made from its early days as the "Wild, Wild West" as an asset class, it's barely out of diapers. Compare that to the forex or futures markets that have taken centuries to mature. Emerging markets provide plenty of opportunities for traders because they lack the established processes and strict regulations of existing financial markets that keep traders from capitalizing on arbitrage opportunities. 

Even as the space matures, infrastructure is increasingly built to an institutional standard, and regulators establish clearer frameworks, market inefficiencies still exist. This means that traders can buy and sell cryptocurrencies over various exchanges and trading venues and sell them higher on other venues, taking advantage of the spread. 

Using algorithms or bot trading, traders can do this continuously and effortlessly, often buying assets at low prices and selling for a profit in the Asian markets, where Bitcoin (BTC) is often at a premium.

Known as the "kimchi premium," the difference in BTC prices in South Korea compared to other foreign crypto exchanges can often be extremely different. In May 2021, the premium rose to an all-time high of more than 20%, giving traders an unrivaled opportunity to profit from arbitrage. 

The same is often true during periods of global unrest, such as during the Hong Kong protests in 2019. The maturity of markets like forex usually prevents traders from cashing in on such simple profit-making opportunities.

Crypto volatility is desirable

Cryptocurrency is notorious for its volatility, with prices fluctuating massively from second to second. Prices can rise or fall by more than 20% in a matter of hours. While high volatility can turn some investors away, it can be desirable to short-term traders who can make a profit from longing or shorting the market whether the price goes up or down. 

Crypto volatility makes trading crypto a veritable gold mine for day traders and swing traders who can lock in profits using futures or perpetual swaps by taking a position for or against the market. 

While equities have certainly displayed volatility lately, with Amazon stock surging by 13.5% in one day and Meta's profits crashing by 22%, this type of volatility is rarely found in traditional markets. Crypto trading, therefore, presents fiat traders with abundant opportunities to make thousands of dollars a day simply trading its volatility. There is also the opportunity to maximize those profits using leverage to amplify gains. 

24/7 crypto trading

Unlike traditional markets, cryptocurrency never sleeps, with opportunities to trade 365 days a year, 24 hours a day. Of course, the downside can be unsociable hours for traders who want to be more active in different time zones. But with the use of tools such as limit orders and stop losses, traders can ensure that their positions are never liquidated at more than they can stand to lose in volatile markets while they sleep. 

In addition to this, cryptocurrency is global, meaning that traders can trade across many different platforms around the globe. This has forced cryptocurrency exchanges to improve their offerings.

As the first digital asset exchange publicly listed on the Nasdaq, EQONEX, for example, is designed for institutional traders, with a regulation-first approach, deep liquidity, maximum uptime, and regulated custodial solutions, among others our many offerings. 

Increased crypto regulation and market maturity 

The improvement of standards across the board is another major factor that's seeing the increasing institutionalization of the space. While the cryptocurrency markets used to present even greater chances for easy profits with their cumbersome infrastructure, frequent outages, and wild discrepancies in prices, these practices are being widely reduced.

As clearer regulation evolves, weeding out opaque practices, proprietary traders now find themselves able to operate in this market that was previously unattainable due to regulatory burdens. 

Global factors and inflation turn more to crypto 

As the report from Acuiti highlighted, global economic factors are greatly impacting traditional markets. With inflation hitting record highs and yield still hovering around zero, investors are increasingly seeking alternative assets, exiting forex, and turning to crypto instead. 



Related Articles

5 Surprising Facts About Bitcoin Beyond Its Price

5 Surprising Facts About Bitcoin Beyond Its Price

January 25, 2022

Christina

While much of the headlines are dominated by the price of Bitcoin (BTC) and constant debates over whether we’re in a bull or bear market, the Bitcoin network carries on undeterred, mining a new block every 10 minutes. Read five fascinating facts about the OG crypto here.

Keep up with crypto through EQONEX!


This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

6 Reasons Why It’s Not Too Late to Get Into Crypto

6 Reasons Why It’s Not Too Late to Get Into Crypto

September 3, 2021

Christina

If you haven’t dipped a toe into crypto yet, you may be asking yourself if it’s too late to get involved. The answer, of course, is no.

6 Ways to Generate Returns from Cryptocurrencies

6 Ways to Generate Returns from Cryptocurrencies

August 10, 2021

Christina

Cryptocurrencies are speculative assets as well as a store of value. For cryptocurrency users, this means that there are now plenty of ways to generate returns from your cryptocurrency holdings. Here are six we’ve picked out.

Top 5 Altcoins to Buy in 2021

Top 5 Altcoins to Buy in 2021

June 8, 2021

Cryptocurrencies hit the mainstream like never before in 2021, and prices duly soared. But, after the dizzying bullish action for most of the year, Bitcoin (BTC) closed in May with its biggest monthly drop in nearly three years.

THE EQONEX CRYPTO GUIDE AND LEARN HUB

Bringing digital assets to the world.

EQONEX is a digital assets financial services company focused on delivering a full, digital asset ecosystem that offers innovative, trusted, and transparent products and services.

Keep up with crypto through EQONEX!


This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

© 2022 EQONEX Capital Pte Ltd
All rights reserved.

IS 749075