The Japanese Bitcoin exchange market has led Bitcoin’s price surge over the past few months. Some analysts including Koji Higashi, project leader of ORB and co-founder of IndieSquare, believe that Japanese investors may be leading the next alternative currency (altcoin) bubble.
Bubble-like growth of the ICO and altcoin market
Since early 2017, the cryptocurrency industry has seen more successful initial coin offerings (ICOs) secure millions of dollars at a hundred million dollar valuation. Like many investors, Higashi remained skeptical toward this bubble-like growth of the ICO and altcoin market because there was little to no market data and actual evidence to supplement or justify the market’s recent growth. Blockchain projects that haven’t even completed alpha to beta testing of their software and secured actual user base raised tens of millions of dollars by selling their local tokens.
According to Higashi, “not-so-smart money” is flowing into the altcoin and ICO markets, led by Japanese investors. He said:
“I think I know the answer now. Newly entering Japanese investors are driving this great altcoin bubble and not-so-smart money is flowing into the space especially into some altcoins at a rather concerning rate.”
In an analytical blog post entitled “New wave of Japanese investors are fueling the altcoin bubble,” Higashi introduced an important element and component of the approach of local investors. Ever since the Japanese government granted its green light to Bitcoin and digital currency investment by effectively legalizing cryptocurrencies, Japanese investors started to actively invest in digital currencies without proper research and understanding of certain altcoins.
Ripple takes it all
For instance, Higashi noted that Ripple (XRP) is one of the most popular altcoins in the Japanese cryptocurrency exchange market due to the reasons Cointelegraph provided in its previous coverage of Ripple’s explosive growth. In an article entitled “Ripple Overtakes Ethereum to Become Second Largest Crypto After Japanese Bank Consortium Formed,” Cointelegraph reported that the market cap of Ripple began to surge as Japanese banks started to experiment with XRP.
Focusing on Ripple’s recent growth, Higashi wrote:
“XRP has been popular for a long time in Japan for whatever the reason. Maybe it’s because major Japanese banks are experimenting with Ripple technology and people here tend to have a lot of faith in banks and large institutions Ripple Labs is partnering with in Japan.”
However, Higashi explained that the majority of investors in altcoins such as Ripple and NEM, the two most popular altcoins being traded in Japan as of current, have little to no understanding of their purpose and origin of value. He simply noted that trading cryptocurrencies have become the new trend of investment.
“Another thing to note about this new trend is that the general lack of understanding or appreciation of the technology by many of new users. This is no surprise and all of us have been there at one point but the new wave of Japanese investors seem to be exhibiting a whole new level of incomprehension and misguided decision making in my opinion,” said Higashi.