Forex traders are bracing for a “tipping point” when the market hits a price ceiling, as traders have been trying to sell stocks in anticipation of an eventual market correction.
The rally in interest in forex has been sparked by a surge in interest from investors in equities and bonds, who have bought into a rally in stocks that has led to more interest from potential buyers in the commodities sector, including gold.
Forex trading peaked in January 2017 and has been gaining steam since then, reaching a peak of more than $20,000 per coin last month.
The rise in trading volume has come at a time when the S&P 500 index is down more than 4% and the Dow Jones Industrial Average has shed about 8% since mid-2017.
Experts warn the rally in trading volumes has created a bubble in the market, as investors continue to pour money into stocks in the hopes of getting their hands on higher returns.
But the S &G, Nasdaq and MSCI all have slipped this month, which means traders are likely to see a gradual pullback in trading prices in the months ahead.
Forextrend.com, an online marketplace for buying and selling forex futures, reported on Wednesday that trading volume was expected to hit a ceiling of $3,000 by the end of the year, a level that experts believe is likely to trigger a “bubble” in the currency.
“There’s no doubt that the price is likely going to come down, but it will be hard to see how it will come down with enough volume,” said Tim DeGraw, founder and CEO of Forextrend, an exchange for buying or selling forextended contracts.
“We’re not looking at a bubble at all, we’re looking at an upside,” he said.
“It’s going to be an exponential decline, but the fact that we’re seeing such a rapid increase in demand for that currency suggests that it’s going up.”
Forex has long been considered a safe haven.
The forex markets have historically traded at a level where it’s safe for banks to sell, which prevents a panic selling market from erupting.
ForeX is also highly volatile, with the volatility increasing during the economic downturns.
Forex investors are also wary of the risk of a potential global economic collapse, given the volatility of the markets.
The S&s have fallen roughly 14% since June, and are now down about 4% from their peak.
The Nasdaq is down 5% and M&.
Securities is down 4% in 2017.
“The market has been a bubble for years,” said Brian O’Connor, chief executive officer of ETFS-Moody’s Analytics.
“I don’t think you can put a price on that.”
Investors in the commodity sector are also taking a wait-and-see approach.
Forexpatch.com said it expects the global commodities markets to fall by about 5% this year.
That would be the biggest decline in the Semiconductor, Metals, Oil and Gas, Gold and Copper sectors, which together account for about $20 trillion in assets.
Forexs biggest asset class, Forex futures trading, has fallen by more than 10% in the past two months, according to ForexWatch.
The stock market has fallen $1,000 in value in the last 24 hours.
The S&s have also fallen by about $2,000 over the same period.
“When it comes to ForeX and commodities, the last thing that you want to see is a collapse of these markets,” said Robert O’Connell, an investment strategist at Barclays.