“How much will it fall if the bubble bursts?” Late on February 28th, during a live-streamed discussion on YouTube, individual investors in Japan spouted their unease about the future of Bitcoin. The bitcoin market, which once exceeded 6 million yen, plummeted prior to the live broadcast, falling below 5 million yen in just 2 days.
The plunge in the bitcoin market also negatively impacted global stock prices, but rebounded shortly after. Many optimistic views of “10 million yen is not a dream” are appearing again on Japanese social media sites.
Bitcoin is attracting speculative capital from young Japanese people. At virtual currency exchange bitFlyer, about 4 percent of new investors who opened bitcoin accounts in Japan between January and June 2020 were in their 20s, the largest number by age group. The company’s survey shows that the same trend can be seen in Europe and the United States.
Bitcoin is still not popular as a means of settlement and is still being questioned as an asset,” said Kenzaburo Ikeda, a former employee of the Bank of Japan and director of the Kyodo PR General Research Institute. If incidents such as hacking occur again, people’s distrust rises and investors are likely to abandon it.”
Personal funds in Japan are also flowing into real estate, which is typical of physical assets. The reason for this is that property transactions are gradually going online and the threshold for individuals to invest in real estate has been significantly lowered, represented by real estate crowdfunding. Japanese investors are able to invest small amounts of money, such as 10,000 yen per lot, claiming high yields of 5 to 10%. The number of operators has increased to about 40. As an example, a project launched in February by a large service provider, Loadstar capital, raised 360 million yen as the ceiling amount in just 2 minutes and 23 seconds.
However, a portion of service providers around real estate crowdfunding in Japan have been administratively sanctioned for inadequate investor protection. Because there is no formal Appraisal and evaluation by a third party, real estate insiders point out that “although high yields can be obtained, there are projects where investors do not know what kind of house they have invested in.”
Professional auction of whiskey launched by liquor trading company Zao (Osaka City)
“You can speculate on anything as long as it goes up in price,” and this speculative fever among individuals in Japan has also spread to things that were not originally the subject of investment. Recently, Japanese money has also been pouring into premium whiskeys. Raw whisky takes longer to produce and is considered to be more scarce. At WhiskyInvestDirect, a British company that invests in Scotch whisky, the number of accounts of Japanese investors increased by 15 percent in 2020 over the previous year to more than 120.
WhiskyInvestDirect explained that “monetary easing and inflationary concerns are driving the increase in individual investors with an interest in tangible assets such as whisky and fine art”. A company employee in his 40s in Hyogo Prefecture, Japan, who opened an account and invested about 3.3 million yen, said excitedly, “I found this while looking for investment goods other than stocks. I intend to continue to invest money in the future.”
Suntory’s single malt whisky “Yamazaki 55 years”
In the whiskey market, Suntory Holdings’ “Yamazaki 55 Years” became a topic of conversation at an auction held in Hong Kong in August 2020, selling for approximately 85 million yen (approximately 5,084,300 yen). This price was 28 times the price (3 million yen, or about 179,400 yuan) that it was sold for in Japan, excluding tax. Some voices from the people involved said, “Even though it is a limited edition item, it has risen to such a degree that it is beyond common sense”.
Regarding the situation of individuals who are buying various investment objects, the chairman of the financial product broker Moneybrain, Toshiyuki Shiraishi, believes that “there are clear signs of overheating, just like the financial management in the 1980s bubble period”. Economic commentator Eiki Oe also pointed out that “the meaning of investment is being misunderstood. He also said, “Originally, investment should look at the growth of companies and markets to bet on future value”.
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