Breaking news for Kraken: apparently the platform has closed its crypto exchange in Japan due to weakness in the global cryptocurrency market.
Following more details about the closure of the Kraken exchange in Japan, it appears that the company, analyzing the current market conditions in Japan and a weak global cryptocurrency market, does not justify the resources required to further grow its business in Japan, at least not at this time.
Kraken crypto exchange exits Japan: here’s why
The crypto exchange Kraken announced Wednesday that it has decided to cease its operations in Japan and cancel its registration with the Financial Services Agency (JFSA) effective 31 January 2023.
The company explained that the decision to exit the Japanese cryptocurrency market is part of its efforts to prioritize resources and investments in areas that align with the company’s strategy and best position Kraken for long-term success.
The details of the official announcement by Kraken, as anticipated, read:
“Current market conditions in Japan, combined with a weak cryptocurrency market globally, mean that the resources needed to further grow our business in Japan are not warranted at this time.”
As a result, Kraken will no longer serve customers in Japan through Payward Asia, the exchange reveals through a statement. Payward Asia Inc. operates Kraken’s services in Japan.
Furthermore, Kraken reported that all affected customers have until January 31 to withdraw their holdings in fiat and cryptocurrencies, noting that the deposit feature will be removed on 9 January. Finally, Kraken reassured customers that the platform is fully funded to ensure that all affected customers can withdraw assets in a timely manner.
The suffering of the crypto market and the words of Kraken’s CEO
It is not news that the cryptocurrency market has suffered significantly this year. In particular, the crypto par excellence, Bitcoin, is down more than 65% since the beginning of the year.
Aggravating and being the cause of the market turmoil simultaneously were two phenomena in particular: the collapse of the Terra ecosystem in May and the implosion of FTX in November.
These two factors negatively impacted many crypto companies, and a number of companies ended up filing for bankruptcy, including FTX, Three Arrows Capital (3AC), Voyager Digital, Celsius Network, and BlockFi.
Last month, Kraken CEO Jesse Powell, already concerned about the situation, said:
“Since the beginning of this year, macroeconomic and geopolitical factors have weighed on the financial markets. This has resulted in significantly lower trading volumes and fewer client sign-ups. Unfortunately, the negative influences on financial markets have continued and we have run out of preferable options to align costs with demand.”
In addition, Kraken had already announced in November that it was reducing its global workforce by 30% to about 1,100 people to adapt to current market conditions.
The cryptocurrency market in 2023: some predictions
As reported above, 2022 as a whole was a year marked by a strong crypto winter for the entire crypto and blockchain industry. Now, with 2023 just around the corner, let’s look at some possible predictions for the crypto market in the coming year.
Although cryptocurrencies are no strangers to “boom and bust” cycles, i.e., processes of strong economic expansion and contraction, many analysts believe that the current market decline is different from past ones, due to the general difficulties in the economic environment.
David Kemmerer, CEO of CoinLedger, said in this regard:
“The cryptocurrency winter may last longer this time around. This is due to macroeconomic factors: inflation at a 40-year high, rising interest rates and political instability due to the Russian invasion of Ukraine.”
Thus, high inflation and rising interest rates by the Fed have hit both the stock and cryptocurrency markets hard. Risky assets such as stocks and crypto suffer when interest rates rise.
This is because with higher rates, liquidity decreases and riskier investments suffer more. Indeed, the same phenomenon that is hurting cryptocurrencies has caused tech stocks such as Meta (-67%), Netflix (-52%) and even Apple (-22%) to lose value.
In conclusion, to answer the question of how long the crypto winter will last, it is necessary to understand how much longer the Fed will maintain an aggressive monetary policy to counter high inflation. According to some experts, falling inflation and falling interest rates are the only lifeline for cryptocurrencies right now.
Nick Saporano, CEO and co-founder of Divi Labs, a company that provides services and solutions in decentralized finance, said:
“The last bear market lasted more than two years. It has only been a year since this point and the macroeconomic climate has deteriorated significantly.”