Bitcoin was created to replace the existing monetary system, including the fiat currency itself. However, many have now used it as a speculative asset that would be exchanged for a fiat currency to be spent.
The US Dollar or USD, is currently the most used fiat currency in the crypto space, which is why most traders use it to liquidate their holdings to enjoy their profit.
However, there are more fiat currencies to choose from to receive more profit, due to the difference in exchange rates of these currencies.
Looking at the BTC to USD Dominance
According to a report from Investopedia, BTC to USD is the most searched-for exchange rate for Bitcoin traders.
This is because most Bitcoin traders use the USD as their main fiat currency when trading Bitcoin.
Since Bitcoin accounts for more than half of the crypto market’s transaction volume, this means that most crypto traders use USD for their fiat purposes.
The dominance of USD is also supported by leading stablecoins in the market, which are USDT and USDC a USD-backed stablecoin created by Tether and Circle.
Outside the crypto market, USD is also the most used currency in the financial market, as its dominance spans across global assets since the end of World War II due to the sudden end of the Gold Standard.
Because of the sudden termination of the Gold Standard, most countries are “forced” to hold USD in their reserve, which is why until today, most transactions in the market are done through USD.
However, looking at the global currency, other fiat currencies might lead to more profit for Bitcoin traders.
This is because traders can utilize the difference in value through the exchange rate, even if their native currency is in USD or other currencies that have lower value than USD.
Other Profitable Fiat Currencies for Traders
The strategy for utilizing other fiat currencies for more profit when trading Bitcoin is to use it when liquidating or capitalizing on profit.
For example, a trader can use USD or their native currency that has a lower value than the USD, to purchase BTC and then hold it until the price goes up, and then sell it to other currencies that have a higher value than the currency that they are using.
After that, the trader can exchange it back to their native currency to capitalize on more profit from the trade.
There are five examples of currencies that have more value than the USD, which are the Kuwaiti Dinar (KWD), the British Pound (GBP), the Euro (EUR), the Cayman Islands Dollar (KYD), and the Swiss Franc (CHF).
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Most of them have a slight difference in terms of value to the USD, but one stands out from the rest, which is the strongest currency in terms of value, the Kuwaiti Dinar.
However, it is still rare for an exchange to provide trading BTC to KWD, which is why it is better to utilize other more common currencies like the GBP or EUR.
Example of the Strategy
The exchange rate of 1 KWD is currently around 3.25 USD and 1 GPB is currently at 1.24 USD, which means that USD has less value than the two currencies.
Since their value will always be more than the USD, traders can buy BTC with USD and then sell it to GBP. After having the GBP the trader can then wait until the value appreciates even more against the USD to then liquidate it for more profit.
For example, if a trader buys $100 worth of BTC with the USD when the rate of BTC to USD is at $60,000 and the rate of GBP to USD is at 1.24, he will have 100 US Dollars in BTC.
If the BTC to USD rate increases to $61,000, the trader will experience a 1.67% gain, where their USD will be worth 101.67.
The trader then sells their BTC with GBP at a rate of GBP to USD of 1.24, which means that the trader will have 81.74 GBP.
When the rate of GBP to USD increases to 1.27, then the traded can exchange their 81.74 GBP to USD, where it will be worth 103.81 USD, which is a 2.14 USD Profit from the exchange rate.
Conclusion
Now, imagine doing this with more capital, which can yield significantly more results for traders in the long term.
Note that to do this, traders need more capital and more percentage in profit for it to be noticeable. But looking at the example given, even with a 1% movement, the exchange rate can give so much difference in the profit.
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