Following the aggressive interest rate hike campaign initiated by the Federal Reserve in March 2022, Japan has been caught within an unprecedented whirlwind of exchange rate turbulence. Subsequently, traders from Japan-focused digital asset exchanges are increasingly turning towards the world’s leading cryptocurrency, Bitcoin.
Data curated by the Paris-based Kaiko indicates a notable shift within the Japanese crypto market, with Bitcoin trade volume on Japanese exchanges surging from 69% to 80% within the first half of the year. Impressively, the total trading volume for this period clocks in at a staggering $4 billion, signaling a 60% year-to-date increase.
Echoing this shift in the digital market, the share of Bitcoin-Japanese yen pairings in the total volume of Bitcoin-fiat trading pairs has also registered an increase from 4% to 11%. According to Dessislava Aubert, a research analyst at Kaiko, these numbers imply a growing appetite within the Japanese markets.
But why Bitcoin? Why now? The reasons that appear to be driving this shift are multifaceted. Bitcoin, often referred to as ‘digital gold,’ is perceived as a robust hedge against traditional finance and fiat currencies, which are considered volatile due to their intrinsic or fixed value not being backed by a tangible asset. Countries grappling with inflation and immense fiat currency volatility have, in the past, embraced digital assets. To this end, Bitcoin has spiked 84% to $30,000 this year while the yen has depreciated 6.3% against the US dollar, continuing the previous year’s near 14% slide.
Simultaneously, the regulatory sphere seems to be warming up to cryptocurrencies in Japan. Just last month, Japan passed a groundbreaking stablecoin bill designed to better protect investors. This, coupled with the speculation around a possible hawkish tweak to policy announcements by the Bank of Japan next week, suggests a sense of volatility within the yen market – one likely to help maintain the current trend of rising Bitcoin demand.
Ultimately, the inflation specter that many thought was unfathomable is looming over Japan, with a key gauge excluding energy components recently hitting a four-decade high. As such, Japanese investors may turn in greater numbers towards perceived alternative investment options like Bitcoin in the face of decades of chronic deflation and a rising inflation outlook. This suggests that Bitcoin’s role as a digital safeguard against traditional financial volatility is becoming increasingly important – likely to result in continued growth in Japanese crypto markets.
Source: Coindesk
