Investing in BTC/JPY: What to consider
The first and largest cryptocurrency (by market cap), Bitcoin is popular among crypto traders around the world, and is bought and sold using numerous fiat currencies. Among the more prominent markets is Japan, in which Bitcoin is often purchased using the local Yen currency. Therefore, the pairing of the cryptocurrency and the fiat currency is quite natural and could present a new option for crypto traders and investors. Those who predict Bitcoin will strengthen against the JPY could open a long (BUY) position on this pair and those who believe it is the Yen that will gain strength could open a short (SELL) position.
The BTC JPY crypto/fiat pair will be open for investment with a limit placed on the daily invested amount. When it reaches its daily limit, it will be closed to new investors and reopened the following day. Closing the investment can be done at any time.
Who should include BTC/JPY in their portfolios?
Bitcoin traders and investors: Those who go long on Bitcoin, even for short-term periods, do so because they believe that the Bitcoin price will rise. Pitting it against the Japanese Yen could potentially, in certain instances, boost their gains if Bitcoin rises in value.
Cryptocurrency traders: Some traders and investors who focus on cryptocurrencies, are constantly looking for new ways to diversify their portfolios. With the BTCJPY crypto/fiat pair, they can add another dimension to their portfolios, while still keeping it crypto-focused.
Day traders: Cryptocurrencies are known to be very volatile at times, sometimes showing price swings in the double-digits in one day. Day traders often try to take advantage of these movements in an attempt to generate short-term profits.
Long-term investors: Both cryptocurrencies and fiat currencies can also display steady trends over long periods of time, either rising or falling in the long run. Investors who believe they know which way the BTC/JPY chart will be headed, could consider a long-term investment.
What drives the BTC JPY pair’s price?
Both Bitcoin and the Japanese Yen are high-profile financial assets, with various factors that could generate volatility for each. Since each side of this crypto/fiat pair is exchanged in a different market (cryptocurrencies and foreign exchange, respectively), each of them can show gains or losses from reasons relating to their respective markets. Here are a few factors that could impact either side of the pair:
Bitcoin’s mainstream status: Whenever the discussion arises regarding the inclusion of cryptocurrencies in mainstream financial markets, Bitcoin is the first crypto to be debated, since it is the first and largest (by market cap) crypto. If Bitcoin receives the stamp of approval from a financial body, such as a well-known investment firm offering its clients crypto services, or a regulatory body approving a Bitcoin derivative, this could have a positive impact on the BTC price. In contrast, if Bitcoin is publically rejected by such a body, it could lead to a price decrease.
The Japanese economy: The Yen is closely linked to the Japanese economy, with its value being impacted by various financial occurrences in the country. For example, a rate decision by the Bank of Japan could impact the JPY price. Another factor to watch could be the Nikkei chart, as it often displays an inverse relationship with the Yen.
The cryptocurrency market: Since the cryptocurrency market is somewhat confined within itself, it often displays market-wide trends. Therefore, it is possible that the BTC chart will show strong movements in a certain direction if the rest of the market is moving in the same way.
Global economy fluctuations: Japan is a very influential economy in the global landscape and has extensive trading relationships with numerous countries. Therefore, global trends that span several markets could also impact the Japanese economy, subsequently affecting the JPY price.
Bitcoin in Japan
The relationship between Japan and Bitcoin is quite complex. The traders and investors of Japan (and in many other Asian markets) have embraced the crypto market and Japan has become quite a prominent hub for crypto assets. However, around the time the market peaked, during the 2017-2018 crypto bull run, Japan was home to the largest hack in cryptocurrency exchange history - which had a tremendous impact on the local and global markets.
In January, 2018, popular cryptocurrency exchange Coincheck was attacked by hackers who managed to steal $500 million. The hack was taken very seriously by Japanese authorities, who in turn introduced new restrictions and regulations for crypto trading in the country. When one such regulation forced exchanges to freeze all new accounts, pending the implementation of anti-money-laundering practices, the impact of Japan on Bitcoin was fully demonstrated. When the regulatory instruction was announced, Bitcoin prices dropped by 8% worldwide.
However, Japan remains a bustling cryptocurrency hub, with several exchanges forming their own self-regulating bodies and the government operating to regulate, rather than ban, the innovative assets.
Conclusion: BTC/JPY is a fresh way to invest in Bitcoin
Bitcoin is one of the most popular cryptocurrencies among traders and investors around the world, with its trading volumes, market cap and market dominance rarely challenged by other cryptos. As the variety of crypto assets grows and expands, the possibilities for portfolio diversification, while still keeping it crypto-focused, will become more largely available. Pinning BTC against the Yen gives Bitcoin traders a new way to add depth to their portfolio, while still keeping it Bitcoin-based.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.This content is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.