In April, the blossoms of the cherry trees turn Japan pink. Image by Yoshikazu TAKADA via flickr.com. License: Creative Commons

Because Japan’s financial system is obviously having problems, the company Metaplanet is buying Bitcoin. But is the Bitcoin strategy serious? Or is it just meant to give the ailing stock price a little boost?

The Japanese investment firm Metaplanet recently bought an additional $1.6 million worth of Bitcoin. It now owns 141 Bitcoin, or about €8.6 million. This third purchase by the company since April 2024 caused its share price to rise significantly again. The strategy is working.

The Japanese investment fund, which has been investing in real estate and companies for more than a decade, launched a Bitcoin strategy in April 2024. It made Bitcoin its strategic reserve currency this month. It cites Japan’s significant debt, persistent negative interest rates and the growing instability of the yen as reasons. Japan’s net debt ratio climbed to more than 250 percent of GDP last year, making it the highest among the G7 countries, while the yen has already lost more than 50 percent against the dollar since 2021.

It is becoming increasingly difficult to ignore the fact that Japan’s financial system is sliding into problems. Cryptocurrencies, on the other hand, Metaplanet explains its Bitcoin strategy, “have cemented their presence and have clearly become a part of global finance.” There is little doubt “that Bitcoin now plays a role in international investment.” With the purchase of 117.7 Bitcoins in April – about $7.19 million – Metaplanet is implementing this insight. The company expects Bitcoin “to maintain its value against the Japanese yen and to serve as a highly liquid, long-term supportive currency.”

In addition, the company has also taken a page from MicroStrategy, the US company that has accumulated more than 100,000 Bitcoin: In the same press release, it announced that it would raise another 935 million yen through “stock acquisition rights” – that’s a good five million euros – and then use this capital to buy more Bitcoins, “emulating an emerging trend among some listed companies, especially in the US”. This is primarily intended to reduce the proportion of yen in the portfolio and the associated risks; Metaplanet calls it “a strategic transformation” on its website.

On May 10, Metaplanet bought another 19.87 Bitcoin for 200 million yen, and on May 10, the aforementioned 23.25 Bitcoin followed. The company has accompanied each of these moves with press releases that, unlike usual, appear not only in Japanese but also in English. Metaplanet is obviously targeting international investors in the hope that they will invest in the company.

This came at just the right time for the share price, like a deux ex machina holding out a saving hand to the hero just before he falls into the abyss: The price has followed the typical shitcoin pattern for many years, after violent bubbles in the early 2000s and 2010s that drove the price up to several thousand yen, it has been sinking with great persistence, continuing to lose value every year to end up at an absolute low of under 15 yen in the spring of 2024. The Bitcoin strategy brings a little relief from this decline. The first purchase raised the price to 36 yen, at the end of May it rose to more than 80, and after the third purchase last week it even jumped briefly to more than 100 yen – the highest value since 2020.

Whether Metaplanet will actually become “Japan’s Microstrategy”, as some observers are cheering, is unlikely given the stark difference in scale. In fact, little is known about the company, little about other investments, little about successes. The share price, which has been falling continuously for more than 10 years, is less of an indication of this, but rather shows a company whose greatest achievement was obtaining approval for stock trading, and which has since led the sad existence of a ailing penny stock.

Does it really make sense for such companies to feed their stocks a little by publicly buying Bitcoins? Does that help anyone except the owners and holders of the empty bags? And does it help Bitcoin? Perhaps temporarily – but what if this becomes fashionable and the Bitcoin effect fades for companies that do not create lasting value themselves? Will their Bitcoin holdings then weigh on the Bitcoin price like a perpetual mortgage?


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Source: https://bitcoinblog.de/2024/06/18/japanische-investmentfirma-kuert-bitcoin-zu-strategischer-reservewaehrung/



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