Bitcoin has long been a marquee name, if you will, for the cryptocurrency space. However, against the larger backdrop of the Covid-19 pandemic, Japanese holdings of cryptocurrencies have surged to an all-time high.
According to a report by The Japan Virtual and Crypto Assets Exchange Association (JVCEA), amounts of cryptocurrencies such as Bitcoin, XRP, and Ether have risen exponentially since March. The crypto industry’s self-regulatory organization said Japanese cryptocurrency exchanges held 169,376 bitcoin, which was 11% higher than February. Ethereum was 1.14 million a 5.7% growth, while XRP stood at 3.2 billion a 6.4% surge.
The report further states that the number of Bitcoin Cash (BCH), MonaCoin (MONA), Litecoin (LTC), and NEM (XEM) also increased slightly in March. Bitcoin’s spot trading stood at 617.3 billion yen (about $5.8 billion) during the same month. This was 11 times more than the trading volume of XRP, the second-most traded cryptocurrency that same month.
It is not immediately clear why Japanese investors increased their crypto holdings. There are chances that Japanese Bitcoin investors are hesitant to buy more fearing the direction the cryptocurrency market is headed. The investors may be keeping more cryptocurrencies to the exchanges to sell instead unlike the withdrawals Coinbase exchange is experiencing. A market analyst at BitBank, an FSA-licensed cryptocurrency exchange surmised that price movement and user’s holdings of cryptocurrency are “correlated inversely.” He explained:
“In the time of downward price movement, you can say that users send cryptos to exchanges for the purposes of taking profits or loss cutting. Another reason might be a Japan premium in the BTC market compared with the US dollar-based market after March 12th.”
Cryptocurrency’s Inherent Scarcity
As shutdowns meant to mitigate the spread of Covid-19 continue, the global economic picture gets darker. The way that money is flowing during the pandemic is changing the cryptocurrency market. In Europe and America, unemployment is at its peak, and analysts predict a recession’s likeliness. In what could be a strange coincidence, the fiat-centred economy is responding by printing more fiat currency. Bitcoin held its third halving event last May, highlighting the cryptocurrency’s inherent scarcity.
More people are entering the crypto space, making them bitcoin more formidable. Reddit recently rolled out an Ethereum-based community point’s project targeting the subreddit’s over 2 million users. The program saw over 10,000 new cryptocurrency wallets registered, boding well for the growth of crypto.
Analysts are encouraging bitcoin traders to take advantage of the downtime during the pandemic to enter the crypto scene, which is likely to grow. While there are not many things to be optimistic about now, cryptocurrency and blockchain technology may be the exception.