CryptoBitcoin has found a new home in Japan. Since the Federal Reserve (Fed) began its aggressive interest rate hike campaign in March 2022, the Japanese yen has significantly depreciated. The Japanese Yen has experienced some of the most severe swings in exchange rates in history.
The volatility has traders on Japan-focused digital asset exchanges turning to bitcoin (BTC), the world’s most valuable crypto by market cap, which is widely regarded as a hedge against conventional finance.
Bitcoin becomes a haven for Japanese traders amid Yen’s turmoil
According to data gathered by Paris-based Kaiko, the share of Bitcoin transaction volume on Japanese exchanges grew from 69% to 80% in the first six months of 2023. The entire trading volume on Japanese exchanges was $4 billion in June, representing a 60% increase year to date.
This year, the bitcoin-Japanese yen (BTC/JPY) pair’s proportion of total volume in bitcoin-fiat trading pairs went up from 4% to 11%.
Bitcoin is commonly regarded as digital gold and a hedge against traditional Finance and fiat currencies, which are said to lack intrinsic or fixed value and are not supported by tangible assets.
Historically, citizens of nations plagued by inflation and fiat currency volatility have embraced digital assets.
On average, BTC traded at a premium ranging between 0.5% and 1.25% on Japanese markets this year. It signals rising appetite on Japanese markets.
Dessislava Aubert, research analyst at Kaiko
This year, the yen has depreciated 6.3% against the U.S. dollar, extending last year’s decline of nearly 14%. The decline of the yen is primarily attributable to the divergent monetary policies pursued by the Federal Reserve and the Bank of Japan, which has maintained a pro-easing posture despite global tightening.
The chart demonstrates that trading activity on Japan-focused exchanges has increased faster than in Korean markets and the Coinbase exchange, which is listed on the Nasdaq.
The crypto environment in Japan
According to Binance, the live price of Bitcoin is $ 29,799.86 per (BTC / USD). BTC has a current market cap of $ 579.15B USD. The 24-hour trading volume sits at $ 14.23B USD. BTC is -0.33% in the last 24 hours, with a circulating supply of 19.43M.
According to CoinGecko, the global crypto market cap sits at $1.24 Trillion, a -0.7% change in the last 24 hours and a 13.96% change one year ago. As of today, the market cap of Bitcoin (BTC) is at $579 Billion, representing a BTC dominance of 46.58%.
The BTC adoption in Japan is just getting started. Analysts predict that the trend may continue because Japan already has a regulatory framework, unlike the United States, where enforcement is still used to supervise the industry.
Moreover, Japan passed a landmark stablecoin law for investor protection last month. The volatility of the yen is likely to persist as reports circulate that the Bank of Japan could announce a hawkish policy adjustment next week.
Finally, the unthinkable is happening in Japan: inflation is rising, and a key index that excludes the energy component has reached a four-decade high. Higher inflation following decades of chronic deflation could result in increased demand for perceived alternatives such as BTC.
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