Japanese investment firm names Bitcoin as „strategic reserve currency“

Im April färben die Blüten der Kirschbäume Japan rosa. Bild von Yoshikazu TAKADA via flickr.com. Lizenz: Creative Commons

Because Japan’s financial system is obviously facing difficulties, the company Metaplanet is buying into Bitcoin. But is this Bitcoin strategy genuine? Or is it just a bid to give some lift to its languishing stock price?

The Japanese investment company Metaplanet recently purchased an additional $1.6 million worth of Bitcoin. This brings its holdings to 141 Bitcoin, approximately €8.6 million. This third purchase by the company since April 2024 has once again significantly boosted its stock price. The strategy seems to be working.

The Japanese investment fund, which has been investing in real estate and companies for over a decade, initiated a Bitcoin strategy back in April 2024. In that month, it designated Bitcoin as its strategic reserve currency. The reasons cited include Japan’s significant debt, persistently negative interest rates, and the growing instability of the yen. Japan’s net debt ratio climbed to over 250 percent of GDP last year, the highest among G7 countries, while the yen has lost more than 50 percent against the dollar since 2021.

It’s becoming increasingly difficult to overlook that Japan’s financial system is in trouble. Cryptocurrencies, on the other hand, Metaplanet explains its Bitcoin strategy, „have cemented their presence and clearly become a part of the global financial system.“ There is little doubt, it claims, „that Bitcoin now plays a role in international investment.“ With the purchase of 117.7 Bitcoin in April—about $7.19 million—Metaplanet is implementing this insight. The company expects Bitcoin „to retain its value compared to the Japanese yen and serve as a highly liquid, long-term supportive currency.“

Moreover, the company has taken a page from MicroStrategy, the U.S. company that has accumulated more than 100,000 Bitcoin: It also announced in the same press release that it would raise an additional ¥935 million—about €5 million—through „Stock Acquisition Rights,“ essentially options on stocks, to purchase more Bitcoin with this capital, „emulating a rising trend among some publicly traded companies, notably in the USA.“ This is primarily aimed at reducing the share of yen in the portfolio and its associated risks; Metaplanet calls it „a strategic transformation“ on its website.

On May 10, Metaplanet purchased another 19.87 Bitcoin for ¥200 million, and on May 10, it acquired the already mentioned 23.25 Bitcoin. Each of these moves was accompanied by press releases that, unlike usual, were not only in Japanese but also in English. Clearly, Metaplanet is addressing international investors here, hoping that they will invest in the company.

For the stock price, this was a godsend, like a deus ex machina that saves the hero just before the fall into the abyss: The price had been following the typical shitcoin pattern for many years, after intense bubbles in the early 2000s and 2010s that drove the price to several thousand yen, it persistently fell, losing more value each year, landing at an absolute low of under 15 yen in spring 2024. The Bitcoin strategy brings some relief from this decline. The first purchase lifted the price to 36 yen; by the end of May, it had risen to more than 80 yen, and after the third purchase last week, it briefly jumped to more than 100 yen—the highest value since 2020.

Whether Metaplanet will indeed become „the MicroStrategy of Japan,“ as some observers cheer, seems unlikely given the vastly different scale. In fact, little is known about the company, little about other investments, little about successes. The continuously falling stock price for more than 10 years suggests otherwise; it points to a company whose greatest achievement was obtaining approval for stock trading, and since then has been leading the sad existence of a declining penny stock.

Is it really sensible for such companies to prop up their stock price a bit by publicizing Bitcoin purchases? Does it help anyone besides the owners and holders of the empty bags? And does it help Bitcoin? Perhaps temporarily—but what if this becomes a trend and the Bitcoin effect fades for companies that create no lasting value themselves? Will their Bitcoin holdings then be an eternal mortgage on the Bitcoin price?