JPY/BTC Trading Behaviour: A Reflection of the Japanese Economy or Due to the Construction of the Bitcoin Price Index
8 Pages Posted: 24 May 2019
Date Written: April 27, 2019
Japan has a long history with Bitcoin from it supposed creator, Satoshi Nakamoto, to the rise and fall of the Japanese Bitcoin Exchange, Mt Gox, to its wide acceptance by the Japanese retail sector, yet an analysis of the yen/bitcoin market, which is now the dominant trading pair, indicates that this is still very much a domestic market, developed under the auspices of Japan’s Financial Services Agency who saw the potential in bitcoin and its blockchain technology. Yet, the yen/bitcoin market has not developed into a global trading alternative, but rather remains a well sponsored domestic market with trading responding to the economic situation in Japan. There are two surprising outcomes: one, trading in yen/bitcoin across exchanges is highly correlated unlike the US dollar/bitcoin market where prices vary across exchanges; and two, around 60% of trades are at a price below the recognised global bitcoin price indicator, Coindesk’s Bitcoin Price Index.
Keywords: Bitcoin, Japan, JPY/BTC Market, Cryptocurrency Market, Bitcoin Price Index, Yen
JEL Classification: G11, G15, F65
Suggested Citation: Suggested Citation