Uncommon Knowledge in Common Places
Uncommon Knowledge in Common Places
The allegory of Mrs. Watanabe & her financial odyssey
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While the internet is a vast place, we tend to find much smaller and concentrated segments of the void to reside where we ultimately spend most of our time. For some, this is due to enjoyment, while for others it’s learning. PageOne & Farcaster’s /replyguys could very well be one of those places & we deeply appreciate it if that’s the case ❤️. We have big plans for 2024, even if we’re starting them a month late, so expect routine coverage of the things you’ve come to enjoy from P1 moving forward!
Since I could use the internet, I can confidently say that only one website has given me continuous value and taught me how things work ; ̷4̷c̷h̷a̷n̷ Youtube.
YouTube is one of the most information-dense platforms on the internet as you can find hundreds, if not thousands, of hours of content on extremely niche topics from people very knowledgeable in their chosen fields who upload this knowledge at no cost, absolutely free for everyone to see. It’s essentially a “public good”.
One genre of videos I devour is that of Video Essays. This ranges from building Iconic Dioramas from scratch, the Influence of H.R. Giger's art style, Blueprint to killing a God or even NewJeans lore.
A couple of months ago, I came across a video essay on Financial History. More specifically, it was solely based on Mrs. Watanabe. That video is the reason for this article but I’ve been ruminating on this thought process for a while too.
Who is Mrs. Watanabe?
Mrs. Watanabe is not a single person. It’s a personification of the Japanese housewife speculators, who ultimately persevered enough to affect international markets. During the economic downturn in Japan in the 1990s, most families were affected with a severe lack of money ultimately leading to the interest rates in Japan falling close to 0. As a result, the little amounts they did have were now not growing either.
In Asia, it’s very common for the women of families to be in control of everything “home” which includes household spending/saving. They’re homemakers and anything that affected the sanctity of their families was an issue. Taking matters into their own hands, they embarked on their journey to financial empowerment and from that they utilized an investment strategy known as “Carry Trading” in the Forex markets.
In a nutshell, they would borrow money with a very low interest rate (in this case, the Japanese Yen) and they would use that to invest in a stronger currency with higher interest rates (which was mainly Australian Dollars). The difference in interest rates would be their profit and it wasn’t long before they started to earn meaningful amounts (often more than their husbands). Collectively Mrs. Watanabe controlled over 54% of the Japanese household assets (through cash or bank deposits). As such, it wasn’t long before hedge funds around the world began to copy-trade Mrs. Watanabe (in a similar fashion to those tracking anon ETH addresses).
How impactful are Mrs. Watanabe? It’s estimated that they account for 28% of global currency trade.
Mrs. Watanabe have matured over the years too. Back in 2017 (when BTC was declared legal tender by the Japanese Government), 40% of all Asian crypto trades were based on the Japanese Yen. Mrs. Watanabe likely fueled more of the now decade+ crypto rally than one might think while most people are still unaware of their existence.
What lessons can we learn from Mrs Watanabe?
Constant Learning
The success that Mrs. Watanabe achieved was mainly because they were open to learning and dedicated themselves to the financial markets. No question was too embarrassing to ask and no area was left uncovered. Mrs. Watanabe ultimately cared about learning to better themself, not to appear better for the sake of appearances.
Discipline and Risk Management
While Mrs. Watanabe could’ve been like your average shitcoin purveyor and 100x leveragooor with a stop loss into the Yen carry trade, they were the pillars of their homes and opted for proper risk management with proper stop losses and healthy risk-taking. After all, they value the stability of their families.
Adaptability
The markets never stayed the same and to only rely on one style of trading would not be sustainable. This was tested during both the 1998 Russian Currency Crisis and the 2008 Financial Crisis. Different situations call for different strategies as there is no one golden strategy that works for everything. This is aptly applicable to the current crypto markets as narratives and trends can shift in hours while the entire space operates in something akin to dog-to-human years when compared to TardFi markets.
Helping Your Neighbours
Mrs. Watanabe, while starting individually, grew and compounded as a collective where their trades were not only monitored but also copied. It’s an ecosystem of like-minded individuals who share this experience.
Apart from being a story, you can tell your friends to pretend you’re well-informed, there are some lessons which should be applied to crypto. Starting to piece together the lessons we learn from Mrs. Watanabe, you’d be surprised to find out that these kinds of ecosystem spurts occur all the time, and many of them you may even recognize even if you didn’t know it:
The Recently concluded SAG-AFTRA strike
Community alignment for a common goal and sharing resources to lift & support each other makes this work and it’s one of the best things to witness when they ultimately occur. Collectively for crypto, while you could argue a specific coin going up is fantastic, the energy behind that is selfish and it doesn’t inspire others in quite the same way.
The closest (I think) we got to this moment within crypto would be “P2E (Play to Earn) summer” through the scholarship program that the Axie community pioneered. For those unaware, a scholarship was possible because earlier members of the Axie Ecosystem had an abundance of Axies that they weren’t using. So while they would custody the Axies (in an address they controlled), they could give the connect game account (which would use an email & password combo) to play the game and any subsequent winnings would be shared between the player and the account owner.
To say it was mutually beneficial for both parties would be an understatement.
This is what ultimately allowed Axie Infinity to gross over $1B in revenue, becoming the highest-ever earning crypto game (which remains unchanged) as of writing this. While the effects of the bear market did not exclude the Axies, signs of market revival are here after nearly 2 years of consistent shipping from Sky Mavis; This is their 3rd crypto cycle after all. Only last week did we see one of the rarest Axies being sold for nearly $250k.
Ultimately, this is what I believe makes the space refreshing, unpredictable and inescapable. To be able to interact, talk and even befriend people from the unlikeliest walks of life connected through an industry which is built on the foundation of transparency and financial reform. Of course, the shitposts and memes are great too.
There exists no greater mind share of “playground” of information and experience as condensed and pure in energy as you can find within the confines of CT. Ultimately, I’d like to think that Mrs. Watanabe would be proud of an ecosystem that consistently works together, shares information publicly instead of behind paywalls and builds towards the greater good while constantly working on the path to secure financial freedom for themselves and their families.
I’d also like to thank Tolks & Tervo for their help with editing and cleaning up this article.
If you’ve made it this far, thank you for reading and I hope this has been a useful read. You can follow me on Twitter (and now Farcaster) to let me know what you think about this post & don’t forget to subscribe to Page One for your essential crypto readings!
Sources:
https://asia.nikkei.com/Business/Markets/Currencies/Mrs.-Watanabe-had-a-change-of-heart-in-2022-Bank-of-Japan-report
https://fbs.com/blog/trading-instead-of-cooking-a-dinner-240
https://medium.com/@nahian.momin/mrs-watanabe-a-remarkable-tale-of-financial-ingenuity-f3562f4d2295
https://www.reddit.com/r/todayilearned/comments/15z89vf/til_mrs_watanabe_is_a_collection_of_thousands_of/
https://www.fxclearing.com/blog/mrs-watanabe