What will cryptocurrency do to the Forex market?

There is no doubt that the cryptocurrency market took part of the liquidity that we had in the Forex market, but the currency market is still the biggest in the world and cryptocurrencies are not even close to those volumes.

Editing this answer in October 2021, data shows that the Forex market has a daily volume of transactions that is $6.6 trillion.

Regarding the cryptocurrency market, according to the estimations on the Blockchain website, cryptocurrencies reached a peak of $14.6 billion daily volume, on the 19th of May, 2021, so the Forex market is about 500 times bigger than the Crypto market.

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A concern that people may have is: “what if cryptos take over in the future? Will USD, EUR and all the other currencies disappear? Will it be the end of the Forex Market?”.

First of all, a market worth $6.6 trillion in transactions every day, won’t disappear in a matter of a few years.

Second, at the moment, we are at a stage in which it is likely that Governments and Central Banks will issue their own cryptocurrencies. In the future, we might have the USD in the form of a cryptocurrency, sounds pretty cool :)

The last point is that, from a technical point of view, as a trader and investor, the Forex Market is still in another league compared to the Crypto Market for the following reasons:

1. Faster executions;
2. Lower spreads;
3. Easier to liquidate the trade/investment;
4. Very hard to control, unlike the Crypto market which is quite easy to manipulate. Elon Musk with Dogecoin is a perfect example of how the crypto market can be manipulated to make rich people richer.

In addition, the crypto market is still highly unregulated, which means that your assets are not covered by any financial institutions, and you cannot claim them back in case of unexpected events, such as the exchange going bankrupt.

I can’t predict the future, so I can’t say that it will never happen. I just say that, if it does happen, that day seems pretty far off to me.
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