Matrixport’s Market Sentiment Index Points Towards Bullish Momentum

Metaplanet Inc., a Tokyo-listed crypto investment and consulting firm, has announced its adoption of Bitcoin as its strategic treasury reserve asset. This decision comes in response to the ongoing economic challenges facing Japan, including high government debt levels, prolonged negative real interest rates, and a weakened yen. Japan currently faces significant economic adversity, with the highest government debt-to-GDP ratio among developed countries at 254.6%, according to the International Monetary Fund. Despite the government's decision to raise interest rates in March, the Japanese yen experienced a sharp decline to its lowest level in 34 years last month, as reported by Reuters.Photo by Takashi Miyazaki on UnsplashBitcoin as a store of valueMetaplanet Inc. highlighted Bitcoin's attributes as a non-sovereign store of value that has demonstrated appreciation against fiat currencies. The firm noted that Bitcoin's monetary policy is predetermined and immutable, with a maximum supply of 21 million coins set to be reached by the year 2140. This characteristic distinguishes Bitcoin from traditional monetary metals and other cryptocurrencies subject to centralized control. Strategic approachIn its official release, Metaplanet Inc. stated its intention to leverage a variety of capital market instruments to enhance its bitcoin reserves. As of May 10, the company reportedly held 117.7 BTC, equivalent to $7.2 million, according to data from Bitcointreasuries.net. This move reflects Metaplanet's strategic response to Japan's economic conditions and its commitment to diversifying and growing its assets in the cryptocurrency space. 

Upbit Singapore Gains In-Principle Approval for Major Payment Institution LicenseCryptocurrency exchange Upbit Singapore announced in a press release via PR Newswire that it has secured an in-principle approval (IPA) for a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). The IPA enables Upbit Singapore to continue providing regulated Digital Payment Token services in compliance with the Payment Services Act 2019 as it progresses on the path toward obtaining a full license.Photo by Paul MARSAN on UnsplashUpbit’s presence in AsiaIt’s worth noting that Upbit Singapore is part of Upbit APAC, a larger entity that operates exchanges bearing the same name in Thailand and Indonesia. Both Upbit Thailand and Upbit Indonesia are also regulated by their respective local authorities: Thailand’s Securities and Exchange Commission of Thailand and Indonesia’s Commodity Futures Trading Regulatory Agency (BAPPEBTI).Upbit APAC holds a technological partnership with Dunamu, the operator behind South Korea’s largest cryptocurrency exchange, Upbit.Crypto firms flocking to SingaporeThis development places Upbit Singapore among the ranks of other cryptocurrency exchanges in the city-state. Earlier this month, GSR Markets, the Singaporean arm of global crypto trading firm GSR, also achieved IPA status in its journey towards obtaining a full license. Other notable names in the industry, such as crypto exchange Coinbase and crypto payment firm Ripple, have already attained full licenses. The transition from an IPA to a full license took approximately a year for Coinbase and about four months for Ripple.Meanwhile, the Upbit enterprise has been making various efforts to solidify its presence in the crypto industry. One of its key initiatives is focused on enhancing user protection. For instance, as the leading cryptocurrency trading platform in South Korea, Upbit recently launched a campaign aimed at assisting crypto investors in recovering mistakenly transferred assets.However, there have been concerns regarding Upbit’s relationship with Kbank, the internet-only bank that provides real-name bank accounts to the Korean exchange. In Korea, cryptocurrency exchanges that facilitate the trading of Korean won are legally obligated to secure such bank accounts as part of anti-money laundering measures. Referring to a document provided by the Financial Services Commission (FSC), Lawmaker Kim Hee-gon highlighted that Upbit customers make up 18% of the bank’s total customer deposits. This percentage is significantly higher than what other banks that offer accounts to exchanges typically experience. Lawmaker Kim has criticized the bank’s relatively extensive exposure to the cryptocurrency exchange, underscoring the importance of elevating the level of Upbit’s reserve funds held at Kbank to prepare for unforeseen losses.

Korean Crypto Exchanges Struggle Despite Market RecoveryThe results of a recent study by the South Korean Financial Intelligence Unit (FIU) released on Monday revealed that ten domestic cryptocurrency exchanges have reported zero revenue from transaction fees, with half of them struggling to achieve a daily average trading volume of KRW 1 million ($740).Photo by Maxim Hopman on UnsplashTrends of growth and declineThe study looked into data from 35 registered virtual asset service providers (VASPs) for the first half of this year. The findings showed that compared to the second half of last year, the crypto market capitalization and Korean won deposits increased, but exchanges faced growing challenges, illustrated by a widening gap between leading fiat-to-crypto exchanges and smaller crypto-only exchanges.In the first half of this year, the operating profit of won-based exchanges reached KRW 259.8 billion (approximately $193 million), a 46% increase compared to the second half of last year, which recorded KRW 177.9 billion. In contrast, crypto exchanges recorded an operating loss of KRW 32.5 billion. Notably, out of 21 crypto-only exchanges, 10 of them reported no revenue at all from transaction fees, and 18 were in a state of complete capital impairment. Meanwhile, the operating profit of won-based exchanges was concentrated among the country’s top two exchanges, Upbit and Bithumb.But from a broader perspective, as of the end of June, this year’s total capitalization of the crypto market reached KRW 28.4 trillion — a 46% increase compared to the end of the second half of last year. Korean won deposits also increased by KRW 400 billion, or 11%, compared to the previous half. The overall operating profit was KRW 227.3 billion, up 82% from KRW 124.9 billion at the end of the second half of last year.“The first half of this year saw a rise in prices of virtual assets and investor sentiment, leading to an increase in Korean won deposits, overall market capitalization, and operating profits for exchanges, compared to the second half of 2022,” the FIU remarked.The number of new listings and delistings on virtual asset exchanges also surged with 169 new listings and 115 new delistings. These represented a more than double increase and a 47% increase, respectively, compared to the second half of last year. 66% of the delisted crypto assets were coins that had been exclusively listed on a given exchange.Despite the market’s recovery, trading volume and the number of users have slightly decreased. The daily average trading volume in the domestic crypto market for the first half of this year was KRW 2.9 trillion, down 1.3% compared to the second half of 2022. In addition, the number of registered accounts with VASPs also dropped by 19% to 9.5 million compared to the end of last year. This can be attributed to a growing number of dormant accounts and the removal of duplicate accounts.The quantity of verified users has also declined. The number of individuals and corporations that had completed the mandatory Know Your Customer (KYC) procedures needed to engage in trading decreased by 210,000 to 6.06 million (including duplicates) compared to the end of 2022. The majority of users, or those who own less than KRW 1 million in virtual assets, dropped by 7%.On the other hand, the amount of virtual assets leaving the country increased. In the first half of this year, a total of KRW 22.1 trillion was transferred to whitelisted overseas operators or individual wallet addresses, marking a KRW 500 billion increase compared to the second half of last year. This trend could be accredited to futures trading and arbitrage trading influenced by the so-called “kimchi premium” — a term used to describe the difference between trading prices of cryptocurrencies in Korea and in other foreign exchanges.Age demographicsOther findings showed that the age group that traded the most virtual assets is in their 30s, accounting for 30% of all users. Within this group, men make up 70%, with 1.27 million men recorded as engaging in crypto trading. Following closely with 1.2 million, men in their 40s were the second-largest demographic.