Bitcoin Soars Above $1,600 On Relentless Japanese Buying Frenzy

Tyler Durden's picture

Four days ago we reported that bitcoin has surged above $1,400, hitting a new lifetime high, while rising above $1,500 on certain Chinese exchanges. Since then, bitcoin's latest exponential rise has only accelerated, and moments ago the price of the cryptocurrency surged as high as $1,600 on the Coinbase exchange, rising as high as $1,655 on the troubled Bitfinex exchange.

What is prompting this relentless surge in Bitcoin?

Several things.

The first, as we noted on Monday,  was "plain old supply and demand." While unclear if the result of a regulatory crackdown seen recently in Chinese-based exchanges, Hong-Kong based Bitfinex and some other crypto exchanges in the industry "have been dealing with liquidity and withdrawal issues the past few weeks." Specifically, Bitfinex had trouble processing transactions after the Taiwanese banks that handle them started blocking requests. That’s part of a trend where some banks are pulling out of sectors they deem risky. A representative from the exchange had confirmed to the WSJ that the inability of investors to withdraw bitcoin is affecting the price. Perversely, instead of forcing the price of bitcoin lower, the liquidity squeeze was forcing traders to offer higher bids to get their bitcoin out, which is subsequently forcing the price up.

Then, there is Japan.

As we observed previously, according to Japan's Nikkei more than 10 Japanese companies are launching exchanges for bitcoin and other virtual currencies, with an eye to tap growing demand after legal changes that make such trades cheaper and easier in the country. As discussed previously, starting July, Japan's consumption tax will no longer apply to purchases of virtual currencies. Exchanges in Japan have also been required since April to obtain a special license, which has requirements for finances and asset management structures, from the Finance Ministry.

One example: SBI Holdings has set up SBI Virtual Currencies, an exchange between the yen and cryptocurrencies like bitcoin and that of the Ethereum platform. The GMO Internet group is also establishing its own company, with plans to increase the number of digital currencies it trades based on demand. Kabu.com Securities and foreign exchange trader Money Partners Group plan to enter the field as well.

While the Bitfinex issue my be localized, Japan's demand has been clearly confirmed by capital flows on various exchanges. Alex Sunnarborg, a CoinDesk research analyst, pointed to a spike in global trading volume, especially from Japan and its bitFlyer bitcoin exchange.

As the chart below shows, Japan’s currency JPY has been responsible for more than half, or 52.35% of bitcoin trading volume in the recent 24 hours, followed by the USD at 28.12%, CNY 8.23%, EUR 4.92% and KRW 2.9%.  The rise in value shows a surge in trading activity, nearly $700 million in bitcoin according to CoinMarketCap. The trading is markedly led by Japanese markets

As Cryptocoinsnews adds, the Yen-bitcoin trading is all the more notable given that Japan continues to impose an 8% consumption rate tax on purchasing bitcoin through exchanges. Toward the end of 2016, Japanese officials took the call to formally end this tax tariff, a move that will go into effect in July this year.

Finally, there is the recent spike in demand for all other alt-coins.

As we further noted on Monday, there has been ongoing investor interest in other cryptocurrencies such as Ethereum which today also reached record highs, rising above $90, further boosting demand, according to Sunnarborg. These alternative digital currencies are usually bought and sold with bitcoin, requiring traders to buy bitcoin. 

The Ripple network is experiencing adoption by a large number of financial institutions to process domestic and cross-border payments. This, in turn, has sparked interest in Ripple’s digital currency, which has had an impressive rally in the last two months, increasing from $0.0054 on March 1 to $0.054 on May 1.

We summarized the ongoing bitcoin frenzy as follows on Monday: "just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies" and added that "If the transition is seamless, there is no telling just how far this particular bubble can grow."

Four days later and $200 dollar higher, we are observing first hand how accurate this predication may have been, although like on Monday, we have no way of telling how long this particular mania phase will last.

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Soul Glow's picture

Damn.  Nerds are not only ruling the stock market but the currency market as well.  I wonder what happens when the economy implodes and they have to pick up a shovel to earn a living instead of pressing buttons for their income.

Mr Pink's picture

And silver gets monkey hammered for the 13th day IN A ROW. Why didn't I buy BTC at $60 like I wanted to???

NugginFuts's picture

Personally, if silver cracks below $16 and into mid $15 range, I might spark a bit of an interest in buying more.... 

Haus-Targaryen's picture

Seeing this chart really makes me more certain the AG and AU moonshot is coming. 

Think about it -- a bunch of 1's and 0's on a computer screen and not backed by a government and you've got it blowing up.  The demand to escape this fiat insanity is there.

But the average idiot you meet on the street has no idea what BTC is, and yet it keeps going up.  I really look forward to the day when even the dumbest of the dumb seek to stabilize their purchasing power in something familiar to them, AG and AU.

BTC and AG/AU are friends, not enemies. For those stackers reading ZH; fear not.  If the powers that be could artifically keep BTC down low -- it'd still be $15 or so.  

There is upside potential here, we're just in a waiting game.  

Keep on'a stacking everyone. 

nuubee's picture

It's not just Bitcoin.
Ethereum is also going crazy upwards.
Litecoin, after YEARS of downtrend has been going up with BTC and ETH, now back above $20 which it hasn't been since like 2015 I think

All crypto is going nuts the past two weeks.

BaBaBouy's picture

GOLD will follow & Eclipse ...

nuubee's picture

I'm certain of it, but I hold crypto and PMs, so I'm covered either way.

BaBaBouy's picture

Apple is holding almost 1/3 Trillion USD virtual Hardrive paper fiats...

This not gonna end pretty...

The 2008 GMT bailouts are kidsplay compared to whats coming...

giovanni_f's picture

crypto is the new tulip. Those who enter early make the most money, but most will not realize it but simply watch their virtual wealth rise and fall as in the dotcom bubble.

After the mania phase is over fortunes will have been made and lost. As with tulips, crypto currencies will continue to exist long after the mania and the world will move on.

Other than wth the crises brought to us by the Fed, the crypto bubble will not hurt the global system.

Enjoy the show while it lasts and stop whining for not being aboard, you bitchez.

USisCorrupt's picture

If you follow Clif High you would know exactly what is happening, he has predicted it ALL and MORE!

This is just way to EASY !

Don't forget about ETC actually better than ETH but I LOVE them BOTH !

nuubee's picture

And Dash... single dude likely has 90% of Dash coins.

giovanni_f's picture

didn't know that - any links, mate?

nuubee's picture

Watch this all the way through. It's not PROOF of what I'm saying, but the guy asking the questions does such a good job asking the right questions and making the dude uncomfortable, it leaves no doubt in my mind that I'm right.

https://www.youtube.com/watch?v=fVLevzdg0bs

It's a shame too, because I love DASH's privacy technology upgrades. You can still use those of course, but don't save in DASH, and don't try to invest in a masternode unless that amount of money is literally throw-away money to you.

giovanni_f's picture

and avoid ZCASH

(but go for Monero. zcash tried to snipe monero last week with fake research but it failed. Never trust snipers).

Raffie's picture

Hard to tell where it is all going.

 


aurum4040's picture

Au and Ag will not surge anytime soon. Yesterday Microsoft demoed an Ethereum based platform that works in tandem with Azure. One cannot understate the enormity and importance of developments such as this. Cryptos not only store value but their tech platforms are literally changing the world in front of our eyes. Especially Ethereum. Ripple is promising as well.  

gunzeon's picture

Problem is that governments own shiploads of gold and can dump whatever it takes to crash it, which is an excuse to buy more for me, but  not so hot if you're in it for profit or need to cash out.

Appreciated Chelsea Clinton's picture

Gonna be a LONGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG wait.

GodSpeed_00's picture

Crypto is the future, people will not be buying gold and silver because they can't transfer it worldwide. That is the past, you people jsut don't get it.

secretargentman's picture

The harder it gets monkey hammered now, the more pissed off it's going to be when the manipulation ends and it comes into it's own.

Soul Glow's picture

I mean, why didn't you buy stawks in 2009?  Why didn't you buy microsoft in 1990?  Why didn't you ask out your high school crush?  Who cares man!  Live in the moment!  You missed out on those things, so now what?  

Obvously silver is oversold and manipulated to make sure everyone stays invested in the fiat system, and that includes crypto-currency as it has no intrinsic value as real money should.  Obviously the central banks are running the world's largest ponzi scheme in history.  Obviously the psuedo-science of economics is a sham.  So what should you do now?  What is the currenct trade that could give you the greatest profit?

tmosley's picture

Intrinsic value menas that it costs about as much to produce a new unit of the currency/money as it is worth. This is the case with gold and silver, but also with bitcoin. A hundred dollar bill, however, costs about a nickel to produce.

 

Soul Glow's picture

Lol cost to "produce" bitcoin?  You mean procure it.  It isn't buried in the ground, you don't have to hunt for it, you have to set a machine to get it.  Does the machine and it's algorythem cost money?  Sure, because a bunch of nerds will pay for it.  But what does bitcoin do once you have it?  It acts as a means of exchange, not as an intrinsic store of wealth.

You and I both know what intrinsic wealth means.  You've been here long enough to know.  Gold and silver has application.  Silver is used as spoon and cup because it is anti-bacterial.  That's why people eat/ate with it.  Gold is the greatest conductor of energy known.  These applications have intrinsic value.  This not to mention gold never corrodes.  It litterally stores its value forever.

Bitcoin should be respected sure.  Don't get me wrong I'm fine with it, but to say it has any real value is wrong.  It is not money, but a currency.  Money must store it's value. I am aware that there is a finite amount of bitcoin, which I like, but that doesn't mean that 1s and 0s have physical value.  They're just digits on the computer.  No more, no less.

giovanni_f's picture

correct. bitcoin is no store of wealth. it is a transactional unit in a closed space with only a few low-bandwith gateways to the outer world. the closed space nature of crypto will become obvious in the moment a critiical mass of people who are sitting on a lot of virtual crypto wealth try to exit the crypto space for fiat at the same time. there will be tears...

Bunga Bunga's picture

If you think it is cheap to mine bitcoins, then start a mining operation. You will learn quickly it is at best a very thin margin business mainly because of electricity cost.

The application of bitcoin is to have a ledger, which no government or central bank in the world can manipulate. That makes it so revolutionary and even more valuable as gold (which can be manipulated by central banks).

giovanni_f's picture

bungs, bunga - that was mean. You simply cannot argue with content in a comment section crowded with anti-crypto snowflakes who are underwater with their junior miners they bought at the peak in 2011. Beware of the anti-crypto downvoting trolls here.

ParkAveFlasher's picture

Gold isn't being manipulated, but its traffic is being manipulated.  The market to buy and sell is being manipulated.  Big difference.

freedogger's picture

Not a lie, back in 2013 I heated my house for a whole winter up here in Canada mining bitcoins. Cut a hole in my main furnace duct and ran a couple of blower fans to clear the heat out of my utiity room where my mining operation was located. Used the proceeds to pay the miner off, the electric bill and by a natural gas hookup for the house.

rbianco3's picture

I suppose you don't care to share how many bitcoins you mined.

I'm curious, is it tens, hundreds, etc? Have looked into mining but decided against it.

tmosley's picture

Ability to use your money industrially means that hoarding it hurts the industries that use it. That is an argument AGAINST using gold and silver as money, not for it. The fact that those metals are used in industry does make the price go higher as it eats down stockpiles (official silver stockpiles are all but gone, so far as I can tell), but it doesn't make them money. 300 years ago, gold and silver were only useful for ornamentation, but they were still money.

anarcode's picture

You don't need to keep explaining how you don't understand it.

Madison's_Ghost's picture

"Lol cost to "produce" bitcoin?  You mean procure it.  It isn't buried in the ground, you don't have to hunt for it, you have to set a machine to get it.  Does the machine and it's algorythem cost money?  Sure, because a bunch of nerds will pay for it."

 

You've just described, in a nutshell, why its called mining in both cases. You also procure gold, it IS buried in the ground. You send machines to get it. Do the machines and the labor cost money? Sure, because a bunch of prospectors pay for it.  Lol!

ParkAveFlasher's picture

You are wrong.  Physical inputs must be measured by their physical outputs.  This is the intrinsic value calculation.

Bitcoin has no physical output.  It is a record-keeping idiom, it is an accounting language.

tmosley's picture

You made up the "physical" part yourself. Gold is "just" a lump of atoms, like a bitcoin is "just" an entry in a shared ledger. Their form or lack of it doesn't make them any more or less valuable. Only their usefulness matters. Both are good trade tokens. Gold can be used for a few other things.

ParkAveFlasher's picture

Bitcoin isn't a token.  It's an encrypted ledger entry.  It's scrip, a wax seal, it's cuneiform, it's knotted bead of a highly advanced language.

Gold isn't a token.  It's an element. 

Both may be used as tokens.  A kiss may also be used a token.  So may a parking ticket, so maya raffle ticket.  So may a bingo chip, which may, with enough calculation, be further monetized. 

Yankee tickets are very expensive, very highly priced.  They have been sold for a hundred years.  Are they money?  Herein lies the difference between price and value.

Consuelo's picture

 

 

Enjoyed reading your posts - such are the well thought-out points that keep me coming back here, day after day.

 

May I also add to your list: Amazon gift cards.   Un-freaking believable those things as 'currency' (but not money

stitch-rock's picture

As the mining network reaches the maximum of the system,
the work needed to produce will grow exponentially.
It's a closed system.

Soul Glow's picture

Sure, which I like about it.  This is how every currency should be.  When the pound sterling was indeed a pound sterling and when the dollar was backed by gold they too were then in a closed system because they were issued based on the backing of a fixed amound of precious metal.  This as the Roman Treasury did at its heighth.  Of course once the pound came off of silver, the dollar off gold, and the denari was shaved and replaced with other metal, and when this happened they all lost value.  

So of course bitcoins advantage is that it is an actual closed system.  It is a great move to trade dollars and other fiat for it.  I have never said otherwise.  But when we look at stored value keep in mind that there is a physical world and now an etherworld where bitcoin lies.  Due to the fact that the latter is not tangible, I would say there is no intrinsic value.

iamrefreshed's picture

Just continte buying real currency. Tulips eventually die, silver/gold don't.

rent slave's picture

I remember when it was $10 in late 2012.Clif High said that it would be at $1000 within a year.He was wrong.It went to $1100.A 10K position would have garnered 1.1 milion.I didn't buy.Story of my life.

HillaryOdor's picture

Finally, there is the recent spike in demand for all other alt-coins.

I've been trying to make this point in vain in the trollbox on poloniex.  Every time bitcoin moves up the herd of sheep rush to sell their altcoins.  Why?  To maintain dollar parity they claim.  If bitcoin is worth more USD then altcoins should be worth less btc to keep the price stable, and yet they often sell enough of them to lower the USD price of the alts by 10% or more, even on a measly 1% move up in bitcoin, just a herd of sheep panic selling.  And even the whole idea makes no sense.  The viability of an altcoin is in no way independent of the viability of bitcoin, and so they should move in unison.  Moreover in order to buy altcoins one generally must first purchase bitcoins to trade for them which puts upward pressure on both btc/usd and alt/btc.  So the whole idea makes no sense at all.  But most crypto traders are morons.  You see them cheering altcoins like ripple when banks start to get involved, as if the greatest asset of the technology is to merely supplement the efficiency of our feudal masters.  The whole thing is a joke.  I hope they all lose their money.

wren's picture

Something is only worth what someone else will pay for it. Personally, I'd rather invest in Beanie Babies. While they are both in limited supply, at least my children are entertained by Beanie Babies. If the value of Beanie Babies ever plumets, my kids will still have a cute and cudly to play with. The same can't be said for currency based strictly on ones imagination. You can't farm with it, fish with it, golf with it, eat it, cure a disease with it, tie a shoe with it, dig a hole with it, build a house with it, shoot a deer with it, shoot your annoying neighbor with it, you can't even blow bubbles with it. It has no weight, it has no purpose except to tell you it holds value and you believe it because, well, you can fill in that blank.

It's amazing the things people are convinced to invest their money in. At least with gold you can make teeth. Try to do that with BTC. You can't even make a paper airplane with BTC.

Mustafa Kemal's picture

Try making a paper airplane out of a golden eagle

BTC is not based on imagination it is based on computaion. Giving you a way to do transactions with Trust, without a third party. No beanie baby

ParkAveFlasher's picture

Whomever wrote the code is your third party.  BTC did not appear of its own animate will.

wren's picture

A gold eagle may not make a paper airplane, but it will work well as a sinker to catch fish. It can also be turned into ammo. Try shooting BTC buckshot at someone and they'll wonder why you aren't playing with the kids and their toy guns.

jimmy12345's picture

I don't think there was any correlation between alt vs usd and btc vs usd.    In poloniex, the main prices you see are expressed as alt coin/btc.   So when btc goes up, the alt coin expressed in terms of its btc price goes down even if the atl coing/usdt price stays the same.

anarcode's picture

Nerds is the reason you don't have to pick up a shovel to earn a living.