Bitcoins are decentralized. Therefore, one would assume that the traders are located worldwide. But in financial circles, one is relatively sure that until recently, a lot of volume still accounted on China, until Government authorities had cut the market. Besides partly South Korea, Japan is the focus of observations. A Deutsche Bank analysis says it had find out that men in the age between 30 and 50 with relatively little or very little financial education are pushing the Bitcoin market.
Their education in the field of Capital Markets should be lower than that of people in the US, France or Germany. Who are these people? So far they´re tried to make money in leveraged currency trading, a trend that has also been observed in Europe in recent years. But especially in Japan, a large number of these hobby traders should have realized that trying to make quick and easy money in this way did not bring the hoped success in recent years.
So this “horde” (that’s what we call it) of gamblers has recently jumped from classic currency trading via brokers over to Bitcoin trading. The motto is “there is fast money to make”. But why just Japan? After all, just about every person on the planet wants to make money quickly and easily, right? For decades there has been deflation in Japan and it was not possible to make returns on classic interest rates Investments. Therefore, investors were forced to invest in high-risk assets if they wanted to make profits. So (obviously) a hearty gambling culture was born.
Two numbers show the extent of Japanese influence on forex and crypto markets. According to “Forex Magnate”, 54% of global currency trading on credit (probably private traders) came from Japan earlier this year. And according to a fresh news from Nikkei, 40% of global crypto trading was traded against the yen in October and November. And it’s unlikely that Europeans or Americans have the idea to trade Bitcoin against the Yen. That´s coming probably from japanes traders!
What does that mean for you as a private investor, who is also currently invested in Bitcoins, for purely speculative reasons? Well, if the “horde” of former Forex traders, who left the Forex market disappointed after losses, has now turned to the Bitcoin market, something similar can happen there. At some point people lose a lot of money and leave the market disappointed. In the Forex market, you can´t classically say that one main value is losing (like a stock), and everyone suddenly loses money. But with the bitcoins, there is a major cryptocurrency trading against the yen or against the dollar.
If Bitcoin is crashing massively, this “horde” of supposedly naive Japanese gamblers will have their Deja Vu experience. The Account Balance is away, and it will be much more worse than in the foreign exchange markets. Because here all traders are de facto gambling on rising prices in the same value, namely the Bitcoin! If it breaks down sharply, and the gamblers are all leveraged, then they´re completely out of the game for a long time. And if one assumes that actually 40% of the crypto trading is done in Japan, then large parts of trading volumes are missing in the weeks and months after a heavy crash.
Only if a trading community is broad-based, and does not put everything on one card, the “game” can start again after a massive crash. If Bitcoin slides 30%, 40% or 50% into the cellar, this group of people may look on empty trading accounts and leave the market in frustration. That would put an end to the bitcoin euphoria. So far the theory. Actually in the last weeks, when it came to setbacks in Bitcoin of as example 10%, the market always recovered quickly. But what happens after a big sale?