Deutsche Bank survey reveals the identity of typical Bitcoin’s traders

6 years ago - Published in Finance, Fintech Land, Technical Analysis

When Deutsche Bank’s Global Financial Strategist Masao Muraki looks at the bitcoin market, he sees a market that is being “held up” by certain forces. In a December 14 research note titled “The identity of who is propping up the Bitcoin market,” Muraki and his team want to know who is holding up the bitcoin market and why is investing in cryptocurrency. Japanese men in their 30s and 40s are the biggest drivers of the bitcoin boom. 

Forty percent of bitcoin trading between October and November was conducted in yen, according to a Nikkei report cited in a note by Masao Muraki, a global financial strategist at Deutsche Bank. 

They determine the primary geographic region of those trading cryptocurrencies as being from Japan, which also accounts for 54% of global currency trading. The Nikkei report notes that a meaningful percentage of those engaged in global foreign exchange trading have stopped their currency trades and moved to cryptocurrencies. 

"Mrs. Watanabe” is a buzzword often used by US/European media and market participants to symbolize the typical Japanese retail investor who trades in FX. We think that retail investors are shifting from leveraged FX trading to leveraged cryptocurrency trading. The typical Japanese leveraged FX trader is thus a man in his 30s or 40s and really ought to be called “Mr. Watanabe”, the report says.

The report points out that this group of people also might not be the most sophisticated lot. “Japanese retail investors are less financially literate than their US peers across all age groups,” the report noted, pointing to a survey by the Bank of Japan’s Central Council for Financial Services Information. “Compared to the US, financial literacy is particularly poor among people 35-54 years of age.”

This group of leveraged FX traders likes the investment due to the expectation for high returns, the relatively high win percentage and the ease with which they can make trades.

From a cryptocurrency trading perspective, this group also has a problem that is holding up the market – and there are other problems that could spread like a contagion Deutsche Bank warns.