Metaplanet Makes Bitcoin a Reserve Asset As Japan’s Debt Mountain Grows

“Metaplanet has chosen to hold Bitcoin as part of its long-term financial strategy. This decision comes in reaction to Japan’s persistent economic challenges, including elevated government debt and extended periods of sub-zero real interest rates, which have resulted in a depreciating yen.”

Beginning in April, Metaplanet has procured a total of 117.7 Bitcoins, equivalent to approximately $7.19 million. This action aligns with the approach taken by MicroStrategy, a publicly-traded U.S. corporation, which has invested several billions of dollars into bitcoin as disclosed on Bitcointreasuries.net. Metaplanet, an emerging investment company, has since divested from Web3 projects and now concentrates solely on investing in Bitcoin and commercial real estate.

This action is noteworthy given the ongoing fiscal crisis in Japan, which reportedly influences the currency market. Advocates of cryptocurrencies have consistently praised bitcoin as a protective asset during periods of fiscal and monetary mismanagement.

According to IMF data, Japan’s current debt-to-GDP ratio stands at over 254%, making it the highest among advanced economies. In comparison, the United States has a debt-to-GDP ratio above 123%.

As a crypto investor, I’ve noticed that the Bank of Japan (BOJ) has been more cautious than its counterparts, like the Federal Reserve (Fed), when it comes to raising interest rates. The reason being, the BOJ carries a heavier debt burden compared to these other central banks. Raising interest rates would increase the cost of servicing this debt, adding another layer of complexity to Japan’s fiscal challenges.

Since early 2022, the Federal Reserve has raised interest rates above 5%, contrasting Japan’s benchmark borrowing cost which hovers near zero. As a result, the Japanese yen, one of the world’s major reserve currencies, has significantly depreciated. The disparity in interest rates significantly influences exchange rates for fiat currencies.

Since the beginning of 2021, the Japanese yen has experienced a significant decline against the U.S. dollar, losing approximately half of its value according to TradingView data. The yen’s latest dip pushed it below the 155 mark per U.S. dollar, reaching a level not seen since the late 1980s. The downward trend prompted the Bank of Japan (BOJ) to intervene in the currency market by selling dollars to prevent further depreciation of the yen.

“The yen’s ongoing weakness presents an opportunity for Bitcoin as a value-preserving alternative to sovereign currencies, potentially increasing in worth. Metaplanet further criticized the Bank of Japan’s approach of maintaining low interest rates and intervening in foreign exchange markets as an ‘unsustainable monetary dilemma.'”

The business intends to keep bitcoin as a long-term investment to minimize taxable profits, while also obtaining more bitcoin through the emission of prolonged yen debt obligations when suitable opportunities arise.

Update (6:18 UTC): I’ve revised the opening statement to reflect Metaplanet’s current focus. The company no longer describes itself as a “Web3 infrastructure provider,” but instead solely concentrates on bitcoin.