Forex trading surged during the pandemic. The rise of cryptocurrencies attracted many individuals into crypto trading, which has also increased their exposure to the Forex market.
What is contributing to the higher interest in forex trading is technology. As forex trading is becoming more accessible via mobile applications, younger traders are showing interest in the market.
In Nigeria, for example, there has been a 46% increase in female forex traders in recent years. Crypto trading in Nigeria is mainly used by businesses rather than by speculators despite actions by the central bank to restrict cryptocurrencies. Nigerians use peer-to-peer platforms to convert their cryptos to fiat currencies.
In the UK, there has been a 23% increase between 2020 and 2021. It has been estimated that at least 33,000 traders have traded forex for the first time. In Asia, there has been a surge in demand for cryptocurrencies and NFTs.
Terra Luna
The decimation of UST and Luna will have a significant impact despite the proposed fork. Crypto traders may reduce their exposure to cryptocurrencies and turn to traditional instruments instead, including stocks and forex.
Crypto ETFs may benefit from the additional attraction of cryptocurrency exposure rather than spot trading.
In order for traditional brokers to adapt to the digital era, creativity and innovation are required. Brokers that fail to adapt risk are being left behind. The first alarm bell is a consistent decline in monthly/quarterly trading volumes.
Below are several topics to consider to penetrate the Asian markets.
Advertising in the Crypto Space
The Asian markets are very interested in the metaverse. JPMorgan was the first US investment bank to realize the opportunity that is offered in the virtual worlds.
Kookmin Bank, the South Korean payment provider, made its presence in the metaverse, offering 1-1 consultation services to potential clients. Additionally, HSBC and Sokin are among the financial services institutions to dive into the metaverse.
Among the benefits of entering the metaverse is branding. Thousands of potential clients may be acquainted with the broker and have the ability to offer customer services on the virtual platform.
There are many metaverse platforms available in today's markets that appeal to either Asia, Europe or US markets. Choosing the appropriate platform that may provide the best results in terms of conversions requires a strategy.
Investing in DeFi Projects
Many financial services have set up institutional funds for investing in DeFi projects in their early stages. To target a specific market, some DeFi projects are designed for the Asian markets.
By partnering with a popular DeFi project, the brand name of the broker will be listed on the project's website. Binance is very successful in doing so, but forex brokers have yet to show their presence in the DeFi sector.
Brand reputation is crucial in today's markets as competition rises. There are numerous sectors within DeFi that may allow the broker to reach its target audience.
Moreover, forming partnerships with DeFi projects may contribute to the brand's reputation and offerings.
The Benefits of Forex Trading vs. Crypto
The Foreign Exchange market has been around for many years as opposed to cryptocurrencies. The forex trading volumes are significantly higher.
At the time of writing, we are witnessing a large sell-off in the top cryptos, such as Bitcoin and Ethereum. While it is true profits may be earned in perpetual contracts, the selling pressure may cause traders to diversify their portfolios.
Some may prefer NFTs but an opportunity for forex trading may be presented. In forex trading, there is no 'contract tax' for buying and selling, no rug pulls, no concern with the project being discontinued and some form of insurance in the event the broker halts its operations (only regulated brokers) etc.
Collaborating with Known NFT Artists
The Asian markets are highly interested in NFTs according to recent studies. A forex broker that wishes to maintain its stand in today's markets must consider collaborating with known NFT artists.
Fortunately, certain NFT artists are more popular in Asia than in Europe. Therefore, geotargeting the audience may be achieved by researching the artists' popularity per region.
The benefits of partnering with a reputable artist are significant in terms of PR. NFTs can be distributed to clients that meet the criteria which is set by the broker.
Carry Trading vs. Staking
As central banks scramble to contain inflationary pressures, higher interest rates will bring back traditional carry trading strategies in the Forex market. Until recently, interest rates have remained near zero, which almost eliminated the attractiveness of carry trading.
Staking cryptocurrencies requires locking the tokens for a certain period of time. In forex, traders may liquidate their positions at any time without being subject to a 'sell tax'.
Highlighting the benefits of carry trading may appeal to Asian investors and traders.
The above are some of the steps forex brokers must consider implementing in order to remain above the water in 2022. Integrating financial blockchain technology into traditional platforms may be the future of online trading.
An artificial intelligence trading tool that is based on blockchain technologies is among the features that may appeal to numerous forex traders in the years to come.
