A recent survey conducted by the Deutsche Bank has revealed that a large number of Japanese retail investors are increasingly switching over leveraged cryptocurrency trading from leveraged FX trading. Exclusive cryptocurrency exchanges are being launched by the operators of largest FX platforms of Japan for offering up to 25 times leverage.
Head of Research at Deutsche Securities Inc (DSI), a Deutsche Bank Group member in Japan, Masao Muraki revealed last week that the retail investors in japan are slowly moving towards cryptocurrency trading from the traditional FX mode. Muraki pointed out that constant failures for meeting profit figures by following the leveraged FX trading route has added stimulus in switching towards leveraged crypto trading. He was quoted as saying:
“Speculation in cryptocurrency is growing to a scale that cannot be ignored. We think that retail investors are shifting from leveraged FX trading to leveraged cryptocurrency trading…Japanese men in their 30s and 40s who are engaged in leveraged FX trading are driving the cryptocurrency market.”
It was noted by the analyst that 54% of global FX margin trading is carried out in Japan. It has been revealed through data published by GMO Click Securities, one of the largest FX trading platforms of this world that men hold 79% of Japanese FX accounts with 63% belonging to the age group of between 30 and 49. These retail investors are termed as Mrs. Watanabe although a lion’s share of such investors are men. Traditionally such investors once were housewives who used to run the household finances. Various platforms in Japan provide leveraged crypto trading.
GMO Coin for example offers five times, fifteen times and twenty-five times leverage for bitcoin-yen trading. Although transaction fee is nil, a leverage fee of 0.05% daily is imposed on all transactions. Financial Times quoted Muraki as saying, “some major FX brokers are using the same 25-times leverage limit that applies to FX trading, but there are no direct rules in leveraged trading of cryptocurrency.”
Bitcoin got legal tender status in Japan on April 1 this year. Since then Bitcoin adoptions is increasing day by day in Japan.
The analyst also revealed that such transactions usually take ten or more minutes for being processed and thus, “the risk of incurring losses greater than margin is higher than in normal FX trading, due to high intraday volatility.”
He also noted that “Japanese investors have positive views on volatility,” adding that “a typical Japanese investment style is a combination of low risk – low return deposits and high risk – high return investment,” as reported by the Wall Street Journal.
Cryptocurrency exchanges are being developed by a large number of leading Japanese FX platforms after Bitcoin was imparted the legal tag back in April for being used as an established payment method.
The parent company of GMO Click Securities, GMO Internet had launched GMO Coin, its exclusive bitcoin brokerage service back in May. SBI FX Trade, the FX subsidiary of SBI Group will be launching eight different crypto-backed businesses including the SBI Virtual Currencies exchange. Money Partners Group, the owner of Money Partners FX platform, has invested in Tech Bureau, the Zaif exchange operator and Kraken. The group has revealed its intention of launching a crypto trading exchange.
FX margin trading services is also offered by Kabu.com Securities, a part of the Mitsubishi UFJ Financial Group (Mufg) which is also planning to come ahead with its very own crypto exchange. DMM.com, an entertainment giant owning FX business termed as DMM FX will be launching a crypto trading business called Next Currency and a bitcoin mining operation in the coming spring.
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Tarunima Ghosh Laha is a Finance Post Grad from St. Xaviers who believes Finance is more than just Balance Sheets and Ledger creation. This filmy bookworm who believes she was a sloth in past life also nourishes a penchant of owning a private zoo someday. Equipped with a laptop and online Lexicon she is all set to give finance a glamorous makeover in the form of exciting writeups with bang on info and flashy new words.
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