The Coincheck acquisition remains at a standstill

The new year's cryptocurrency market has started quietly. This year looks to be a year to strengthen our footing.

■ From technical congestion to a stalemate

Currently, many players are looking at a short-term range of around 700,000 to 800,000 yen.

This is based on the memory among many players that the market overheated after it rose above 700,000 yen last year, and that even in levels below 700,000 yen there were several wicks indicating buying on dips, showing strong buy pressure.

Technically important elements, such as the upper bound of the trend line, the center line of the Bollinger Bands, and the 200-day moving average, are also concentrated in this area, making it clear that active buying and selling are difficult right now.

Also, compared with last year, short-term traders have drastically decreased, so it might take some time for the market to gain momentum. The conditions for movement up or down seem straightforward: “surpass the channel upper limit (up)” or “dip below 700,000 yen for two consecutive days to seek a lower level (down).” Even after these are confirmed, there may be a delay before momentum returns, so a wait-and-see stance is fine for now (which is likely why there are few entrants and the market remains completely stagnant).

Nevertheless, last April’s level was 120,000 yen, so even this level represents substantial growth.

■ Why Monex and Coincheck decided to marry

As this week's important topic, Monex announced the acquisition of Coincheck, which was hit by a hacking incident.

Details such as the acquisition price are omitted, but there are several potential benefits of Monex’s acquisition.

① In the cryptocurrency business where speed matters, it can catch up quickly by acquiring an existing cryptocurrency exchange instead of taking time to obtain approval from the Financial Services Agency for a standalone launch.

② It can acquire talent with blockchain expertise.

③ It can offer services with explosive revenue potential.

④ It can attract younger customers, a target of online securities firms.

Moreover, if Coincheck comes under Monex, it could rapidly strengthen compliance and governance by bringing in personnel with financial industry credentials and know-how,

⑥ When considering future IPOs or acquisitions, Monex, which has a reasonable track record of acquisitions and presumably greater organizational agility than banks, would become a powerful backer.

That also seems plausible.

From this alone, it looks like both sides’ reinforcement points align well.

In fintech companies today, IT talent outnumbers financial sector talent, and because development speed is faster, interaction with regulators and rule-making at financial institutions becomes an urgent issue. For a cryptocurrency business to grow, it is a major hurdle for existing financial firms and exchanges to join forces and quickly bring in financial personnel and know-how.

Monex President Matsumoto emphasized at a press conference that “M&A is like marriage,” and I believe this background is part of the reason.

Nevertheless, the acquisition price proposed by Monex might seem quite low compared to Coincheck’s sales, and it could feel odd to pay a price for a company with higher sales. While we cannot know the negotiations behind the scenes, the scene suggests that cryptocurrencies are entering a new phase.

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【Author】

Kawada Saiō (Kawada Saio)

DTrading Securities Market Department, Trading Section

Born in Geneva, Switzerland. Graduated from Keio University.

Rich experiences traveling the world lend credibility to his fanmental analysis grounded in real experience.

Utilizing the behavioral economics learned as a student, he analyzes psychological biases of market participants theoretically and applies them to trading.

His hobby is shogi; he is a high amateur dan, and his understanding of mid-game exchanges helps in reading the market’s next move.

“The crowd is always wrong” is his creed.

【Disclaimer】

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