Is the Altcoin and ICO Bubble Forming? Japanese Investors May Be the Culprit

The Japanese exchange market has been leading the bitcoin price surge over the past few months. Some analysts, including ORB project lead and IndieSqure co-founder Koji Higashi, believe Japanese investors may be sparking the next altcoin bubble.

ICO and altcoin markets are developing like a bubble

Since the beginning of 2017, the cryptocurrency industry has seen a large number of successful ICO projects that have raised millions of dollars, with valuations even reaching tens of millions of dollars.

Like many investors, Higashi is skeptical of the frothy development of the ICO and altcoin markets, as there is little market data and actual evidence to back up or justify the recent growth of these markets. Blockchain projects that have not even completed alpha to beta software testing and have not yet gained a real user base have raised tens of millions of dollars by selling native tokens.

According to Higashi, “unthought-out investments” are flowing into the altcoin and ICO markets, led by Japanese investors. He said:

“I think I know the answer now. The latest Japanese investors are driving this massive altcoin bubble, and uninformed money is flowing into the space, especially certain altcoins, at an alarming rate.”

In an analysis blog titled “A New Wave of Japanese Investors Is Fueling the Altcoin Bubble,” Higashi brought out an important element and component of the local investors’ entry into the market. Ever since the Japanese government gave the green light to Bitcoin and digital currency investments by effectively legalizing cryptocurrencies, Japanese investors have been actively investing in digital currencies without even conducting proper project research and understanding of these altcoins.

Ripple (XRP) shines

For example, Higashi supports Ripple (XRP), one of the most popular altcoins in the Japanese cryptocurrency exchange market. The reasons for Ripple's explosive growth have been provided in a previous article. In the article titled "After the establishment of the Japanese Bank Alliance, Ripple surpasses Ethereum to become the second largest cryptocurrency", it is pointed out that the market value of Ripple began to surge as the Bank of Japan began to experiment with XRP.

Focusing on XRP’s recent growth, Higashi wrote:

“XRP has been popular in Japan for a long time for whatever reason. Maybe it’s because some of the major banks in Japan are experimenting with Ripple technology. People here have always had a lot of trust in the banks and large institutions that Ripple Labs is working with.”

However, Higashi explained that most investors in altcoins, such as Ripple and NEM, two of the most popular in Japan, have little understanding of their purpose and source of value, and simply noted that trading cryptocurrencies has become a new investment trend.

Higashi said:

“Another thing to note about this new trend is the lack of understanding or appreciation of the technology by many of the new users. This is not surprising, after all, everyone goes through this phase, but in my opinion, the new wave of Japanese investors seems to be showing a whole new level of misunderstanding and misguided decision making.”