Kraken is an American cryptocurrency exchange on both the spot and derivatives markets. The platform is in 5th place in terms of trading volume. The company serves over 7 million clients. At the moment, the capitalization of the crypto currency market is more than $ 1.3 trillion. Most of the trading volume takes place on 5 major crypto exchanges - Binance, Coinbase, Huobi, FTX and Kraken.
In the last year, there has been a boom in activity in the crypto market. On the Kraken platform, in Q1 2021, transactions worth $ 160 billion were made, which is 1.5 times higher than a year earlier. The company's closest competitor, Coinbase, reported $ 335 billion in deal volume over the same period. The main trend of the crypto market is a departure from the domination of bitcoin. In the second quarter of 2020, bitcoin occupied 62% of the total crypto market capitalization, but now this figure is approaching 46%. Analysts predict increased investor demand for alternative crypto currencies providing more modern and lightweight blockchain technologies.
Kraken offers an innovative way of calculating commission for transactions on the exchange - the commission depends on the activity of investors, the trading volume and the liquidity provided. Thus, the platform encourages traders to make more trades, which is beneficial for the company's financial profile. Deposits, withdrawals and trading on the platform are extremely transparent, so anyone can use Kraken's services. In 2021, Kraken's main competitor, Coinbase, successfully sold its shares through a direct listing.
For more than 10 years of its existence, Kraken was able to raise $ 126 million. In the last investment round, which took place in May 2020, the company was valued at $ 4 billion. The CEO of the company, Jesse Powell, claims that at the time of the IPO, the company is not satisfied with the valuation of $ 10 billion. According to the management, Kraken should be valued at least twice as expensive. The price of a share at this estimate is $ 90-100. Kraken's main investors are Digital Currency Group, Blockchain Capital and others.
The main risks for Kraken are growing competition from both centralized and decentralized crypto exchanges. An important factor is the regulation of the crypto market, regarding which there is still no certainty on the part of both the American and regulators of other developed countries. Stricter regulation, as well as partial or complete bans on transactions with crypto assets, are direct risks to Kraken's business. Finally, long-term corrective market sentiments or the so-called “crypto winter” reduce interest in crypto currencies, which negatively affects the overall trading volume.
Nevertheless, there is currently an increased interest in the cryptocurrency market. For example, according to analysts' estimates, the number of crypto investors in the US could double by the end of 2021. Cryptocurrency exchange Gemini conducted a study by polling 3 thousand American in the age group from 18 to 65 years old, whose family income exceeds $ 40 thousand a year. The survey results showed that already 14% of the surveyed Americans own crypto assets, and another 13% of the survey participants plan to acquire crypto assets by the end of the year. Also in the report on the results of the study, it is noted that in 2021 the interest of Americans in digital assets increased significantly. For example, 63% of survey participants who are not cryptocurrency holders said they want to learn more about digital assets and purchase them in the future.
A positive moment for the development of the crypto market in the United States may be the appointment of financier Gary Gensler to the post of head of the US Securities and Exchange Commission (SEC), who spoke positively about blockchain, bitcoin and cryptocurrencies. Speaking at a hearing on his candidacy before the Senate Banking Committee, Gensler called digital gold "a catalyst for change." We doubt that crypto currencies will be recognized as a means of payment in developed countries, but we fully admit that they can be assigned the status of an alternative investment instrument, which will be a historical and positive moment in the development of the crypto market. More and more news is coming in on this account. For example, in June of this year, Greg Abbott, the Governor of Texas, signed a law that includes crypto currencies in the Unified Trade Code of Texas. The governor, who took office in 2015, has a long history of supporting crypto assets.