We are seeing a huge increase in interest in the world of cryptocurrency market. There are two countries at the core of entire cryptocurrency industry development. Those are Japan and China.
Cryptocurrency has become very popular in China because of tight control of yuan from monetary authorities. The government sometimes intentionally devalues the yuan for trading purposes on cryptocurrency market.
Since the Chinese economy is export-oriented, a weak yuan is important for Chinese exporters. For example, Xiaomi has released a mobile phone. The company plans to sell in the west, and the sale will occur in dollars. Conditionally let’s assume the price of the phone is $ 1000. A month ago, the dollar/yuan exchange rate was 1 to 6, and today it’s 1 to 5. So, the rates are also conditional. In the first case, the company will receive 6,000 yuan after conversion, and in the second case — only 5,000. This is also a big plus for the state. Since more taxes will be paid from 6 thousand. Well, we sorted this out.
Interest towards cryptocurrency market
Let’s look from a different angle. The situation is not very joyful for local residents. Along with the growth of private capital in China, rich people began paying attention to cryptocurrency market. Cryptocurrency itself is an alternative to the yuan for them. With their help, unnoticeable withdrawal of capital can occur.
This is only one example of interest towards cryptocurrency market from the inhabitants of the “Middle Kingdom”. However, there are more. In China, the abundance of cheap energy and equipment facilitates the process of mining (production of cryptocurrency). The overall capacity of the Chinese mining pools is about 60% of the total capacity of the entire Bitcoin network.
Repressions and impact: Japanese factor
There was a reduction in the volume of operations of Chinese exchanges and their increase in Japanese exchanges. That was caused by certain repressions from the authorities which occurred in January 2017. The targets of those repressions were Chinese crypto exchanges.
The actions above led to an increase in the volume of trading in Japan. The volume grew from one to six percent. But, this is not the main reason for big interest from the citizens of Japan. Also, there are minimal interest rates on deposits in the country. They are negative for some type of obligations. As in China, cryptocurrencies have attained the status as a more stable asset than the national currency. Therefore, more and more people prefer to invest and store their money in them. Cryptocurrency market in Japan is becoming quite active.
Let us not forget about the legalization of cryptocurrency in Japan in April. The bill, which came into force, gives Bitcoins and other cryptocurrencies the status of payment means.
At the current moment, it is China and Japan that are the driving force behind the global cryptocurrency market and industry. Future will show us what comes of it.