Deutsche Bank: Japan Retail Investors Are Behind Bitcoin Surge

Bitcoin has been enjoying an incredible surge in value as demand for the currency increases. Yet, according to Deutsche Bank it is Mr Watanabe who is behind this surge.

In a note on Thursday, reported Bloomberg, analysts led by Masao Muraki, wrote:

We think that retail investors are shifting from leveraged foreign-exchange trading to leveraged cryptocurrency trading.

According to Germany’s largest bank, 50 percent of global foreign-exchange margin trading is accounted for in Japan. Citing a Nikkei report, the bank added that around 40 percent of digital currency trading was yen-dominated in October and November. It claims that this is likely to rise due to the closure of cryptocurrency exchanges in China, which has seen traders turning elsewhere.

Interestingly, this surge in the price of bitcoin is reported to be down to Mr Watanabe, a term used to describe an individual investor, typically a traditional housewife who looks after the home’s finances.

The bank found that 79 percent of Japanese men hold a foreign-exchange trading account, with 63 percent of them aged between 30 and 49.

However, it stated that if the price of the digital currency were to drop, then retail investors would incur great losses, adding:

The risk of incurring losses greater than margin is higher than in normal foreign-exchange trading, due to high intraday volatility. Furthermore, as speculation in cryptocurrency is growing to a scale that cannot be ignored, we plan to look more deeply into the potential impact on the market if the bubble should burst and the effect of concerns over this on regulations.

This note comes at a time when bitcoin has seen its value increase 17-fold since the beginning of the year. In January, the digital currency was trading at $1,000. Now, though, it is valued at an impressive $17,900, according to CoinMarketCap. The price rise is also due to the fact that Chicago-based exchange, Cboe Global Markets became the first traditional regulated exchange to launch its bitcoin futures contract. By enabling investors to bet on the price of bitcoin, it is helping to push the cryptocurrency further into the mainstream. Fellow Chicago-based exchange, CME Group is due to launch its own on Monday.

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