As the Japanese Yen Continues to Surge, Interest in Bitcoin Trading Rises in Japan

• After the Fed’s interest rate hike policies, the Japanese yen sharply depreciated and experienced one of the most severe currency fluctuations recorded.
• Total trading volume in Japanese stock exchanges reached $4 billion in June, marking a 60% increase since the beginning of the year.
• Bitcoin surged by 84% this year, surpassing $30,000 and traded at an average premium of 0.5% to 1.25% in Japanese markets.

Japan’s currency, the Japanese yen, continues to depreciate against the US dollar; Investors are turning to Bitcoin trading.

Japanese Yen Experiences Sharp Depreciation

Since the Federal Reserve (Fed) launched an aggressive interest rate hike campaign in March 2022, the Japanese yen sharply depreciated and experienced one of the most severe currency fluctuations recorded.

This volatility has led traders on Japan-focused digital asset exchanges to turn to Bitcoin (BTC), the world’s leading cryptocurrency widely praised as a hedge against traditional finance. According to data tracked by Paris-based Kaiko, the share of Bitcoin trading volume on Japanese exchanges increased from 69% to 80% in the first six months of the year.

Total trading volume in Japanese stock exchanges reached $4 billion in June, marking a 60% increase since the beginning of the year. The share of Bitcoin-Japanese yen (BTC/JPY) pair in the total volume also increased from 4% to 11% this year.

Dessislava Aubert, a research analyst at Kaiko, said, “This shows the increasing appetite in Japanese markets.” Kaiko’s aggregated data for Japan includes data from Bitflyer, Coincheck, Bitbank, Quoine, and Zaif.

Bitcoin is widely considered as digital gold and a hedge against traditional finance and central bank currencies; it is criticized for not having intrinsic or fixed value and not being backed by any tangible asset.

Citizens of countries with inflation and currency fluctuations by central banks have previously shown interest in digital assets. Bitcoin surged by 84% this year, surpassing $30,000 and traded at a premium on Japanese exchanges.

Dessislava Aubert said, “This year, BTC traded at an average premium of 0.5% to 1.25% in Japanese markets.”

Japanese Yen Depreciates Against the US Dollar

This year, the Japanese yen depreciated by 6.3% against the US dollar, extending last year’s approximately 14% decline. The separate central bank policy paths adopted by the Federal Reserve and the Bank of Japan have been the main drivers of the Japanese yen’s decline. Despite global tightening, the Bank of Japan maintained its accommodative policy.

According to the graph, trading activity on Japan-focused exchanges increased faster than the Korean markets and Coinbase exchange traded on Nasdaq.

This trend may continue due to Japan already having a regulatory framework, as officials in the US continue to rely on applications to regulate the industry. Last month, Japan passed a landmark cryptocurrency law for investor protection.

The volatility of the Japanese yen will likely continue due to speculation that the Bank of Japan will tighten its policy next week.