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Impact of Cryptocurrency on Traditional Financial Market Practices

Last Updated Date - Mar 21, 2023

Today, most investors are turning to cryptocurrency, even though it has seen its fair share of ups and downs. The volume in which this currency is currently traded makes it a mainstream investment tool.

And all this shift in the market is affecting the traditional financial markets as well. In this article, we will discuss the impact of cryptocurrency on the traditional market and also touch base on the global reaction to this shift.

Cryptocurrency shakes the Traditional Financial Market


It can be challenging to successfully navigate the crypto world, and without the correct guidance, it can be perplexing.

But for modern traders, this is no longer a deciding factor. To diversify their portfolio and expose themselves to greater earning potential, they have continuously researched and invested in new crypto projects.

However, the traditional market was not left unscathed by this mindset. Many aspects of traditional trading practices were defied by cryptocurrency trading. The following is how the traditional market was impacted:

Slowing demand for traditional currency

As the days go by, the perception people have towards digital and fiat currency is also changing. More and more people are starting to use bitcoin for transactions instead of fiat currency.

The major impact this has is on economic stability. Countries relying heavily on traditional currency might face heavy inflationary pressure, and investors will start avoiding investing in currency-derived assets and securities.

Increased Regulations

Because cryptocurrency is an unregulated market, in fear of the practices it may support as it grows in popularity, stock market regulators, financial institutions, and governments are resorting

This is increasing trading regulations. and as the regulations become more stringent, the price of the trading assets may get affected negatively.

Increased Volatility

Cryptocurrency has always been a volatile market, where the prices move rapidly up and down with the slightest of relevant events and news. Thus, it would not be a surprise if this volatility started seeping into the traditional market.

And if in the near future, trading in traditional markets keeps decreasing, it will impact the financial budgeting of many businesses and their operations.

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    Positive Impact of Crypto on Traditional Market

    Crypto has not just negative, but also some very positive impacts on the usual financial trading markets. And to justify this statement, some of the positive points are listed below:

    Lower transaction fees

    One of the best things about crypto trading is that it has lower transaction fees. Thus, for every transaction done using bitcoin, the trader will not have to worry about paying any transaction fees. whereas, with traditional investments, there is a whole lot of brokerage and commission involved.

    To not fall behind in the race, many brokerage houses are reducing transaction fees, ultimately benefiting the traders.

    Improved security

    Another benefit is the security that comes with crypto trading. Bitcoin is stored in a digital wallet making trading extremely secure.

    Therefore, the new trading platform, even the old ones are working on its platform features and security to make sure that traders can indulge in share transfer without any glitches. Online brokers are putting effort into changing the face of their trading platform.

    Be part of the global economy

    Cryptocurrency is a decentralized investment option, which is open to all traders around the globe. So, any friction in the USA crypto market will be felt in the Indian market as well.

    Now, this can be for the good or the bad. This showed that trading at a global level gives much exposure to bigger profits. Thus, many investors have started investing in the Forex market.

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    Worldwide Reaction to Cryptocurrency

    The reaction to this digital currency has been very interesting across the globe. The Government and financial institutions have shown different types of interest in this asset class. The major ones are provided below:

    People’s Bank of China (PBOC)

    The institution showed a positive interest in the currency. They stated that the market is “ripe” for the asset class, but they are still looking for opportunities to gain complete control over the country’s crypto ecosystem.

    Federal Reserve of the United States

    The US Federal Reserve is skeptical about making the currency mainstream, as they still want to eradicate technical difficulties and establish proper risk management and governance over the market.

    The Bank of England

    The Ex-governer of this institution is one of the few officials who are calling the currency a financial revolution and seeing this development in the economy in a good way.

    Reserve Bank of India (RBI)

    The RBi has never fully accepted the concept of cryptocurrency. They have been showing concerns since the beginning of this era in India.

    Currently, they have called a truce with the currency trading, but have levied a good tax on the capital gains incurred from the asset.

    The Bank of Japan

    The Bank of Japan has a very straightforward thought on cryptocurrency which is that it is not a reliable investment tool and will not persist in the market for too long.

    Where to look for New Crypto Projects?

    If you are also looking to slowly diversify into the crypto market, here are a few places where you can look for new projects:

    Cryptocurrency exchanges

    Exchanges are the best place to get updates on the crypto market. Investors and traders will have access to accurate and comprehensive quantitative information on all new projects and market trends with just a brief initial registration.

    The Internet/Social Media

    Social media is a crucial tool for spreading information in this digital age. It is the quickest and best method for spreading information about new developments in the financial sector.

    By examining posts with a variety of pertinent hashtags, traders can keep an eye out for new projects on social media sites, like Twitter, Telegram, etc.  After getting the information, the trader can do research to validate the data.

    Aggregators of Data

    Data aggregators are the information vault. They work to gather useful data from many sources. The information will comprise a list of new projects, price volatility, trend, statistics, and current trading volume.

    All of these data points will provide the necessary understanding to choose a new project in which to invest.


    There are also a few financial websites that provide suggestions and news on all of the new crypto projects that are released. Just make sure to only seek through respectable and accountable websites with reliable info sources.

    DeFi Platforms

    DeFi platforms are an abbreviation for Decentralized Finance Platforms. With one important exception, these sites are identical to typical crypto marketplaces.

    Unlike traditional platforms, DeFi platforms operate on smart contracts, which means that transactions are fulfilled automatically rather than manually based on the rules of smart contracts. These sites aid in the discovery of new crypto-coin projects.


    Checking Initial Coin Offering lists is another approach to learning about new crypto coins. ICOs, like IPOs, provide issuance data and all the specifics on all the new coins. Again, make sure to identify reliable websites to verify the information.

    NFT Markets

    NFTs are non-fungible tokens that are traded with cryptocurrency. These marketplaces are online platforms for buying, selling, and trading NFTs.

    This is also a site where many new projects, built on the platform or otherwise, can be found. Because these NFTs are exchanged using crypto coins, the listing will also educate you on all of the accessible coins in the market.


    Hope the article was informative and gave you a perspective on the effect of cryptocurrencies on traditional trading and financial markets.

    Many have viewed this rise in digital currency as a major step towards digitization, whereas other parties are still hesitant about the concept.

    However, if you have decided to diversify your portfolio and look for new crypto projects, feel free to check out the places mentioned above.

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