In the early 2000s, before the creation of Bitcoin, a mommy blogger-type community of Japanese housewives met via the internet and helped one another master a skill that would set them up to become some of bitcoin’s earliest and most successful traders.
It is not a coincidence that Mt. Gox, Bitflyer, CoinCheck, Zaif, and Liquid (previously Quoinex and Qryptos) — crypto exchanges founded in Japan over a decade ago — once ranked among the most voluminous crypto exchanges.
Japanese conglomerates SBI and Rakuten also rank among crypto’s most prolific investors, funding some of the earliest rounds of Ripple, Bitcoin miners, and an assortment of crypto’s oldest companies.
Japan’s Mrs. Jones
Most people have never heard of ‘Mrs. Watanabe’ — not a woman’s name but a nickname for a group of people. The term evokes a stereotypical Japanese housewife who has profitably traded foreign exchange (FX) while her husband works and can be likened to ‘Mrs. Jones,’ the stereotypical housewife living the American Dream.
Thousands of Mrs. Watanabes started trading FX in the early 2000s, attracted predominantly to the AUD/JPY carry trade. Generally speaking, carry trades are relatively low risk, yet this carry trade was particularly profitable for Japanese citizens during that time.
Uniquely enabled to borrow large quantities of Japanese yen (JPY) on household credit — and at artificially low interest rates thanks to historic interventions by Japan’s Ministry of Finance in bond markets at the time — Japanese housewives earned positive yields in foreign currencies like the Australian dollar (AUD) or New Zealand dollar (NZD).
Moreover, FX brokers offered famously generous margins to Mrs. Watanabe, unapologetically advertising margin requirements as low as 0.25%. This meant the Mrs. Watanabes of the early 2000s could carry trade up to $4 million worth of AUD/JPY with only $10,000 in their FX account.
Japanese housewives get rich
For years, FX accounts proliferated throughout middle-aged Japanese households, often registered in a man’s name but controlled by a woman. These women congregated online, joining chat groups, blogging, and sharing FX trading tips.
Feminists argue that women in Japan have a historic role in managing household finances — including their husbands’ personal accounts — and tend to estimate the power of Mrs. Watanabe as being quite significant. Of course, most FX and crypto accounts might actually be owned and controlled by men — certainly nowadays, when dual-income Japanese households have become normative.
After some of these women got rich carry trading, Mrs. Watanabe began to speculate in other FX markets. Some historians credit the influence of Mrs. Watanabe in the USD’s post-Iraq invasion decline, as well as with various periods of volatility in the Swiss franc.
Of course, as with most retail trading phenomena, a huge number of Japanese housewives ultimately lost money. According to an economic report submitted to the Central Bank of Australia, “As a group, Japanese retail margin account investors held large positions and thus made large losses when carry trade returns turned sharply negative during the [2008] financial crisis.”
Nevertheless, the tradition of women managing household finances in Japan had spillover effects into the early days of crypto trading.
Mrs. Watanabe starts trading crypto
Japan’s Mt. Gox reigned as the world’s largest bitcoin exchange for nearly four years while Japan’s Liquid hosted one of the largest ICOs of all time: Telegram’s $1.7 billion GRAM token.
The country’s Financial Services Agency is one of the leading regulators in crypto, spearheading the first investigation into a major exchange collapse (Mt. Gox in 2014) and becoming one of the first governments to set a policy of pre-approval for token listings.
Unlike most countries, Japanese crypto exchanges must gain approval from the government prior to listing any new tokens. Not only that, after the financial crisis of 2008, Japanese legislators passed a series of consumer protection laws that, among other things, limited the leverage and types of trades available to retail investors.
As of 2022, Mrs. Watanabe — whoever that is — still accounts for a disproportionate 28% of global retail FX trades, despite the country only transacting 7% in interbank FX spot transactions that same year. This disproportionate participation in FX trading continues at around the same rate today, according to the Bank of Japan.
The disproportionate influence of Japan on crypto
Mrs. Watanabe continues to exert significant influence over crypto markets, but no one knows precisely how much money these traders control. However, if they’ve learned anything about cryptography or the principles of Bitcoin — privacy and peer-to-peer transactions, for example — many Japanese housewives could well rank among crypto’s wealthiest whales.
Unlike carry trades, however, in the world of crypto, Mrs. Watanabe has no structural advantage over other countries like she did when Japan’s Ministry of Finance subsidized yen borrow rates. She does, however, have years of additional experience trading digital financial products like FX on margin.