Nomura thinks bitcoin is becoming a wealth effect in Japan.
In the first half of 2017, almost the first two years of the year, most transactions in bitcoin were in China. It has dominated mining, where the largest and most reputable exchanges are located, with a lot of short-term trading and long term speculation.
Then in the summer of that year, the Chinese government banned bitcoin. Exchanges shut down, and traders and investors look for another home to encrypt assets.
Japan is the best place to replace it, so it is the first market economy.
The right-hand chart shows that in November 2017, the yen traded at 40 per cent of the world's trading volume. Six months ago, in April, the yen accounted for less than 30 percent, while the dollar traded at 35 percent.
What's the point of all this?
Because the nomura analysts see the yen's trading volume on bitcoin, it is presumed to be a wealth effect in Japan.
The following inference can be made:
Analysts say the y10 billion increase in wealth has pushed personal consumption up 200 million yen to 400 million yen. Now, combined with the fact that many transactions have been transferred from China to Japan, this growth is in the context of the record for the highest asset appreciation in history.
Based on these views, it is natural to assume that individuals with bitcoin (both holdings and COINS have risen in the past six months) are getting richer.
The wealth effect
The standard theory of classical economics describes the wealth effect above, pointing out that the more a person feels, the more he consumes. And it's not limited to liquid assets. When house prices rise, people feel richer and consume more, even if their bank accounts have not changed.
It is also the basis for nomura's belief that Japanese bitcoin causes a wealth effect.
It is not clear whether the results are as expected, and some suggest that the currency volatility we see may dilute the wealth effect to some extent.