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Japan continues to print large amounts of cash, while it’s 10-year yields are performing poorly. How will the Bitcoin price be affected?
Holger Zschaepitz, the senior editor of the financial desk and market maniac at Welt, shared a chart which demonstrated Japan’s struggling economy and its poorly performing 10-year yields.
Oops! #Japan's 10y yields drop back to 0%, could turn negative every minute as BoJ keeps printing money like crazy. pic.twitter.com/9sADIfv31R— Holger Zschaepitz (@Schuldensuehner) April 17, 2017
Oops! #Japan's 10y yields drop back to 0%, could turn negative every minute as BoJ keeps printing money like crazy. pic.twitter.com/9sADIfv31R
As seen in the chart above, for the first time since 2007, Japan’s 10-year yields declined back to zero percent. Zschaepitz noted that the yields could drop to a negative percentage rate at any time in the near future, as the Japanese government continues to print massive amounts of cash.
In conventional finance, a yield is referred to as the income return on an investment usually expressed as an annual percentage rate. Therefore, Japan’s zero percent yield demonstrates a zero percent profit margin or return for its investors.
As the Japanese government continues to print large amounts of money, the inflation rate of the Japanese yen will likely increase proportionally and the value of the Japanese yen will likely fall in the mid-term. Analysts expect that such performance of Bitcoin’s largest exchange market could potentially affect the Bitcoin price.
An increase in Bitcoin price is usually correlated with economic instability and financial uncertainty of a large Bitcoin market. For instance, when the Chinese Bitcoin exchange market was believed to be the largest Bitcoin market in terms of trading volume, the devaluation of the Chinese yuan caused by rising US inflation rates led to a sudden surge in Bitcoin price.
In other words, as the Chinese yuan weakened, traders and investors in the region sought out for alternative wealth management products (WMPs) and safe haven assets such as Bitcoin.
According to various Bitcoin market data providers including Brave New Coin, the Japanese Bitcoin exchange market currently holds over 41 percent of the global Bitcoin exchange market share, followed closely by the US at 30.6 percent.
Thus, the economic instability of Japan and the weakening of the Japanese yen have a significant impact on the demand for Bitcoin in the local market.
In the past week, the daily trading volume of the Japanese Bitcoin exchange market increased substantially and as a result, Bitcoin price surged from around $1,175 to $1,257. Bitcoin price in the Japanese exchange market also demonstrated a 1.47 percent increase in the past 24 hours, showing a consistent increase in demand for Bitcoin.
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