Japanese companies continue to benefit from embracing Bitcoin, following its approval by the government as a form of payment. Small businesses listed on stock exchanges that offer bitcoin-related services are seeing their share prices rise as the price of bitcoin spikes.
Bitcoin’s Gains Spilling into Traditional Stock Markets
On April 1, Prime Minister Shinzo Abe’s government legalized bitcoin as a form of payment. The law, which enforces strict rules on bitcoin exchanges, gives the digital currency more credibility. Many companies subsequently began integrating bitcoin into their business models, with some forming partnerships with small bitcoin startups.
As bitcoin becomes more widely accepted in Japan, its price rises sharply. The cryptocurrency has risen approximately 180 percent at press time since the beginning of the year, according to data from Japan’s largest bitcoin exchange by volume, Bitflyer.
Meanwhile, small exchange-listed companies that have started incorporating bitcoin into their businesses are seeing a similar pattern in their share prices. A well-known Japanese day trader, Naoki Murakami, said that “All of these gains coincide with bitcoin’s rally,” Bloomberg reported on Monday. He explained:
That has made the stocks of these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. […] Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.
“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ he noted.
In addition, he explained that Japanese stock markets have relatively loose listing requirements, therefore many small companies are able to go public with “no income and a market value of as little as $10 million.” That is why the Tokyo Stock Exchange is home to hundreds of small companies, he explained, adding that:
It’s probably not a coincidence that Japan’s stock market is being seen as a proxy for bitcoin investments.
Here are Some Winners
Among companies that are seeing their stocks rally after they announced businesses relating to digital currencies are Remixpoint Inc, Infoteria Corporation, and Fisco Ltd, according to Bloomberg.
Remixpoint Inc. is the largest of the three companies, having a market value of about 31.3 billion yen ($283 million). The company opened a bitcoin exchange, Bitpoint, at the end of May before announcing its plans to install over 100,000 ATMs nationwide. Its stock has more than doubled in value since the partnership with Peach Aviation to bring bitcoin payments to the airline, Bloomberg noted. “Remixpoint is trading at 514 times earnings, the highest among all Japanese technology companies worth more than 30 billion yen.”
Infoteria Corporation partnered with bitcoin exchange platform developer Tech Bureau and is testing ways to use blockchain technology for proxy voting. The company saw its shares up more than 50 percent in the past month. Similarly, financial information services provider Fisco Ltd. began operating a bitcoin exchange last year and is up about 25 percent since early May, the news outlet detailed.
When the price of bitcoin fell, these companies’ share prices also experienced a similar downturn. However, overall, their gains have significantly outweighed their losses.
Do you think these companies will continue to benefit from bitcoin’s price rise? Let us know in the comments section below.
Images courtesy Shutterstock, Japanese Government, Remixpoint, and Infoteria