According to data maintained by Kaiko, the percentage of bitcoin trade volume on Japanese exchanges increased from 69% to 80% in the first half of the year.
The Japanese yen has declined significantly since the Federal Reserve (Fed) began its aggressive interest rate hike campaign in March 2022, marking one of the most extreme periods of exchange rate volatility in history.
Because of the volatility, traders from Japan-focused digital asset exchanges are turning to bitcoin (BTC), the most valuable cryptocurrency in the world and a generally regarded alternative to traditional banking.
According to data monitored by Paris-based Kaiko, the percentage of bitcoin trade volume on Japanese exchanges increased from 69% to 80% in the first half of the year. Japanese exchanges recorded $4 billion in total trading activity in June, up 60% year to date.
This year, the percentage of overall volume in bitcoin-fiat trading pairings devoted to the bitcoin-Japanese yen (BTC/JPY) pair climbed from 4% to 11%.
According to Dessislava Aubert, research analyst at Kaiko, “it signals rising appetite on Japanese markets.” The data used to create Kaiko’s totals for Japan comes from Bitflyer, Coincheck, Bitbank, Quoine, and Zaif.
As a hedge against traditional finance and fiat currencies that are supposed to lack inherent or fixed value and are not backed by any physical assets, bitcoin is commonly regarded as digital gold. Previous generations of fiat currency and inflation-prone nation-citizens have embraced digital assets.
Bitcoin has increased 84% this year to trade at a premium on Japanese markets, reaching a price of almost $30,000.
According to Dessislava Aubert, a research analyst at Kaiko, “BTC traded at a premium ranging between 0.5% and 1.25% on Japanese markets this year on average.”
This year, the yen has lost 6.3% of its value against the US dollar, adding to the over 14% decline from the previous year. The Federal Reserve and the Bank of Japan, which has maintained its pro-easing posture during global tightening, have had different monetary policy trajectories. This is the fundamental cause of the yen’s drop.
The graph demonstrates that trading activity has increased more quickly on exchanges with a concentration on Japan than on Korean markets or the Coinbase exchange, which is listed on the Nasdaq.
Given that Japan already has a regulatory framework, in contrast to the United States, where authorities still rely on enforcement to regulate the industry, the trend may continue. Japan passed a historic stablecoin bill for investor safety last month.
The yen will likely continue to fluctuate as long as there is a chance that the Bank of Japan announces a hawkish change to its policy next week.
