Classic Brokers & Crypto Exchanges: Who Will Win the Fight for Crypto Traders?
The competition and struggle for clients among cryptocurrency exchanges and traditional Forex and CFD brokers are becoming more evident. And more violent. Some exchanges have already offered stock tokens and other related instruments. For example, interest deposits (staking) or cryptocurrency-backed loans can be used for trading.
The Law Is Tough, but It Is the Law
“Dura lex sed lex,” they said in ancient Rome. So far, the question of what exchanges can and cannot do has not been legislated, and regulators’ views in different countries differ greatly on this issue. For example, Germany’s financial regulator BaFin has already sued Binance for selling tokenized shares. So, the fate of money invested in such stocks is quite ambiguous.
As for Forex and CFD brokers, their activities have long been legislated for, and investment risks are lower. At the same time, in addition to transactions with such traditional assets as currencies, precious metals, oil, stocks, and stock indices, some brokers have recently offered a fairly large package of cryptocurrency instruments and services. And it has proven to significantly exceed at times what their crypto competitors provide to customers.
CFDs: Make Money on Market Collapse
For example, NordFX brokerage clients have been able to trade 11 major cryptocurrencies for several years now. And since trading is based on CFDs (Contract for Differences), a trader can make money on the rise and the decline of the token price. Moreover, to open a selling position, one does not need to have a coin in stock; just press the “sell” button in the trading terminal.
A trader can also close a trade at any time, which is very important. Suffice to recall the crypto market collapse this September 7, which failed the technical systems of major crypto exchanges such as Coinbase, Gemini, and Kraken, and some U.S. digital asset trading platforms recorded delays in processing transactions. At the same time, NordFX cryptocurrency contracts were processed in less than 1 second.
Autumn 2021: Bitcoin for $150, Ethereum for $15 is Not a Fairy Tale, but Reality
Another important aspect is margin trading. At NordFX, a client needs only $150 to conduct a one bitcoin trade. And the profit will be the same as if you spent $45,000 on the purchase. In other words, at the current price of this cryptocurrency, the leverage will be 1:300. For an ethereum (ETH) transaction, the required deposit will be only $15, for EOS, it is $0.3, and for XRP, it is $0.02. Deposits and withdrawals of funds are possible in dollars that are usual for CFD brokers and in bitcoin and ethereum.
Trading is carried out on such a popular multifunctional terminal as MetaTrader-4, which integrates dozens of indicators and tools for graphical analysis. And the number of Expert Advisor Robots that fully automate trading on the MT-4 is in the thousands.
This terminal is also useful because you can trade cryptocurrencies and any other assets listed above at the same time from the same account. This is particularly interesting in terms of hedging and risk mitigation when markets fluctuate.
Savings Account: Income + 30%, Loan at Only 3%
There is also another, virtually risk-free option for profit: the Savings Account. It is a unique method developed by experts of NordFX based on Decentralized Finance. The passive investment income on this account is currently about 30%. But at the same time, the owner of such an account can take out a loan and use it for active trading. The interest on the loan is only 3% per annum and is deducted from the investment income.
One of the leading stablecoins globally, Tether (USDT), is used as the account currency. In addition, funding the Savings Account is possible with stablecoins such as USDC and DAI, which are automatically converted to USDT.
Outcome: 1 + 1 = 1?
All of the above clearly shows that brokers like NordFX, wanting to lure crypto traders to their side, have already stopped being classic Forex and CFD brokers offering their clients much, and often more, of what cryptocurrency exchanges have to offer.
But exchanges are also trying to adopt the experience and tools of brokers. Although, due to the lack of legislation and clear regulation, their future is less certain. It is possible that after some time, these two concepts, brokers and exchanges, will be 2-in-1. But until that has happened, it may be right to follow the ancient risk management rule: not to put all your eggs in one basket. So perhaps the best choice is to try both.