Bitcoin bubble's "world tour": next stop is Japan

Since last year, Bitcoin has quickly become a favorite of high-frequency traders operating in China and other parts of the world. One of the main reasons is that transactions within Bitcoin are "frictionless" because no transaction fees are charged for either buying or selling.

However, late last Sunday, China's three largest bitcoin exchanges, BTC China, Huobi and OkCoin, all posted statements on their websites saying that in the future they will charge bitcoin traders a fixed fee of 0.2% per transaction, noting that the fee will "further curb market manipulation and excessive volatility."

One of the reasons why China has dominated Bitcoin trading volume in recent years, in addition to the capital controls on digital currency trading in the United States, is that it is exempt from transaction fees, which has also greatly increased the demand for Chinese Bitcoin exchanges. However, when the price of Bitcoin soared to near its historical high, Bitcoin trading attracted the attention of Chinese regulators because local Chinese investors believed that Bitcoin was more "safe" than the continuously depreciating RMB.

On the 11th of this month, the People's Bank of China also conducted on-site inspections of Bitcoin China, Huobi and OkCoin to investigate a series of possible violations in an effort to ease the pressure on the RMB. Reuters revealed that major Bitcoin exchanges did not receive direct instructions from the People's Bank of China, but all introduced Bitcoin transaction fees to cool the market.

A Bitcoin market bubble is on the verge of bursting, but a new bubble seems to have been born over there - Japan's Bitcoin market is becoming hot again.

A major factor behind the surge in Bitcoin trading volume in Japan is the newly enacted virtual currency law, which will be implemented this spring. Kagayaki Kawabata, head of business development at CoinCheck, Japan's largest Bitcoin exchange, said that the introduction of this bill will make Bitcoin the darling of major Japanese media.

He explained: “After the bill was enacted, major media outlets that once denied Bitcoin began to see Bitcoin as an innovative technology. In the previous Mt. Gox bankruptcy incident, the media also called Bitcoin a money laundering tool, but now TV stations and newspapers including NHK and Nikkei Shimbun have turned to promoting cryptocurrencies to attract users from different backgrounds, from college students to the elderly.

Kawabata believes that the bill may help promote a new trend in Japan: "Many people still think of Bitcoin as an investment tool. However, the situation is changing, and Bitcoin has also begun to be used as a payment method in the past few years. Currently, there are about 5,270 merchants and websites in Japan that accept Bitcoin as a payment method, 99% of which use Coincheck for payment, and the monthly payment amount has increased by 8,900% compared to January last year. And the growth may accelerate in the next few years."

He also added that Bitcoin was once considered a geek's toy, but is now undergoing a huge change: it is gradually being seen as a legitimate currency. Ironically, Japan is also the first country to suffer a large-scale Bitcoin loss, with the bankruptcy of the country's large Bitcoin exchange platform Mt.Gox losing hundreds of millions of dollars. Of course, when it comes to potential profits, people's memories are often quite short.

He pointed out that this change in perception has the potential to draw some traditional traders into Bitcoin and other cryptocurrency trading, which will unexpectedly lead to a significant increase in the volume of electronic currency transactions, so he is also very optimistic about the future of Bitcoin in Japan.

“We believe that the hype around Bitcoin prices is more than just a fluke,” Kawabata said in his final overall outlook. “There are many factors that are driving the volume, so we think the cryptocurrency market will grow significantly in the next few years. Many large companies and banks in Japan have shown interest in cryptocurrencies and are starting to experiment with blockchain technology.”

But in the end, he also said: "Of course, if the second round of Bitcoin bubble in Japan bursts again, we believe that other countries in the world will also welcome Bitcoin with open arms, and the fascinating digital currency bubble will continue its global travel."