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‘SAFU’ or Not, Japanese Retail Investors are Still Interested in Buying Bitcoin Despite the Thursday Bloodbath

This is a contributing article from Bitbank, a Crypto exchange in Japan . This article first appeared on Medium and was written by Yuya Hasegawa, a Market Analyst at bitbank, inc..

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Quick Take:

  • The number of weekly registration at bitbank jumped 40% above average a week after the Mar. 12th BTC price crash.
  • Volume and changes in the number of accounts shows retail investors are buying the dip.
  • The current situation vastly differs from the pre-Crypto Winter of 2019.

Bitcoin not Safu haven, but People Seem to not Mind that

On March 12th, bitcoin saw one of the worst daily price losses in its history — a ¥300k drop, which sent its price below ¥550k for the first time since April 2019. By then, bitcoin and the crypto market as a whole had already been affected by the heightened risk sentiment due to the black swan that is the COVID-19 and demand for hard cash due to margin calls. Furthermore, according to Coinmetrics, short-term holders seem to have dumped a whopping ₿281k a day before the Thursday bloodbath, which possibly have led to forced liquidations on major derivatives platforms.

Whatever the catalyst behind the crash, the whole ‘bitcoin as a safu haven’ rhetoric is once again questioned by naysayers and traditional media because of the event. To be fair, during the week in which the BTC crash occurred, the price of gold also experienced a huge loss. So, on the surface, the vast majority of investors across the financial markets were refraining from taking even small risks amid extreme uncertainty.

However, underneath the surface, there has been an interesting development in the Japanese crypto market. A Week after the crash (Mar 13 — Mar 19), bitbank’s weekly account registration recorded about a 40% above 2020 average. Even on a daily basis (see Fig.1), the number of daily KYC-passed accounts are not negatively affected and kept above-average level for a couple of days after the crash. The number of email registrations even spiked the day after the crash. On top of that, given the increased volume since the crash, retail investors’ interest in bitcoin has not faded at all and, in fact, the intent to buy the dip is quite obvious.

‘SAFU’ or Not, Japanese Retail Investors are Still Interested in Buying Bitcoin Despite the Thursday Bloodbath
Fig. 1: BTC/JPY (Top), BTC Volume (Middle), the Number of Daily KYC Passed Accounts and Email Registrations (both Indexed to their Means) (Bottom).
Source: bitbank.cc

It’s Different from the Last Time

The current situation is different from the pre-Crypto Winter of 2019, when the price of BTC experienced about 50% drop from mid November 2018 to mid December of the same year. Back then, the selling pressure was so strong and persistent that the price showed no significant rebound during the period of heightened volume and even after the volume peaked out (see Fig. 2). Shortly after the late 2018 crash, bitcoin entered into a sort of hibernation period (the Crypto Winter) where its volatility sustained record-low levels for a couple of months. Subsequently, interests in the crypto market as a whole went down and bitbank’s daily account registrations took a hit during this period. However, the current market is showing roughly a 60% rebound from this month’s bottom (¥465k), while sustaining a high volume level.

When we take the increased daily account registrations into consideration, we can once again deduce that the current market recovery is driven largely by retail investors. Furthermore, as Forbes reports, this phenomenon is likely to be global, as Kraken, a San Francisco-based crypto exchange, experienced a steep increase in account registrations after March 12.

‘SAFU’ or Not, Japanese Retail Investors are Still Interested in Buying Bitcoin Despite the Thursday Bloodbath
Fig. 2: BTC/JPY Weekly Price Chart
Source: bitbank.cc

So, why crypto investors gave up on bitcoin back in early 2019 but not this time? It is highly likely that bitcoin’s halving is at play here. As can be seen in Fig. 3 below, the Google Trend for ‘bitcoin halving’ has been soaring for the past couple of months. Of course, there is no absolute promise that the halving will drive the price upwards, but the data from Google Trend suggests that the information about the big event has been spreading all over the internet and, in fact, from January to mid February this year, the market had already been gradually pricing it in. So, there is a good chance that, for this time around, there are many retail investors who want to buy bitcoin or stack up their holdings at the cheapest price possible before its halving.

‘SAFU’ or Not, Japanese Retail Investors are Still Interested in Buying Bitcoin Despite the Thursday Bloodbath
Fig. 3: Google Trend for ‘bitcoin halving’ (for the past 1 year)
Source: Google Trend

English disclaimer is also posted on medium.com

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