Why Japan Could Be Bitcoin’s Next Bullish Catalyst

Japan's Government Pension Investment Fund (GPIF) may move Bitcoin earnings after the central bank raised interest rates to 0%.

The State Pension Fund has published a questionnaire seeking “fundamental information” on investment philosophies related to domestic bonds, domestic stocks, foreign bonds, foreign stocks, real estate, infrastructure and private equity.

Why Japan Can Drive Demand for Bitcoin

The institution is considering gold, bitcoin, farmland, forestry, and other options to include in its low-yield portfolio. The GPIF is currently the world's largest pension fund, with $1.4 trillion in assets under management.

Bitcoin has been a popular hedge against currency volatility in Japan since the US Federal Reserve raised interest rates in March 2022. Research firm Kaiko reports that the six-month rate of crypto currency trading will increase from 69% to 80% in 2023. The BTC/JPY trading pair has risen from 4% to 11% over the same period.

In addition, institutional interest may follow if the country's regulators allow crypto allocation in pension portfolios. One of the largest companies investing in Bitcoin, BlackRock, recently saw such a trend when it invested about $7 billion in net revenue in its Bitcoin exchange-traded fund (ETF).

Although some money came from participants using high-frequency and algorithmic trading strategies, a significant part came from retail investors who wanted to access crypto through retirement accounts, according to Grayscale research director, Zach Pandl.

“The buyers of these things are mainly individual investors who want to get access to crypto through their tax-advantaged retirement accounts and brokerage accounts,” Pandl said.

Read more: Crypto Portfolio Management: A Beginner's Guide

As a result, Bitcoin's price rose to an all-time high above $70,000, suggesting that Japan's pension fund may be generating a similar source of interest. Three decades of higher wages mean employers need to set aside more money for retirement contributions. South Korea and some US states like Virginia already use crypto in their pension funds.

Japan's Bitcoin Considerations for Retirement Investments Explained Along with New Interest Rate Policy At this week's meeting, the Bank of Japan raised interest rates to between 0% and 0.1%, ending a decade of negative rates. The country has previously been reluctant to use a central bank digital currency (CBCC) to combat negative rates.