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Kraken

Cryptocurrency exchange

PRE-IPO INVESTMENT STRATEGY

Kraken is a financial technology company that offers a service for the exchange of more than 40 cryptocurrencies, futures trading, and staking.The main office is located in San Francisco, USA. Founded in 2011.

FINANCIAL PERFORMANCE

  • Total funding: $ 118.5 million
  • Final round: $ 14 million
  • Last Round Valuation: More than $ 4 Billion
    Last round share price: $ 20.8
  • Major Investors: Hummingbird Ventures, Blockchain Capital, Digital Currency Group.
  • The volume of spot transactions for the year (from October 30, 2019, to October 29, 2020) amounted to more than $ 69 billion, and the average daily turnover was $ 188 million. *
  • The volume of futures transactions for the same period amounted to $ 24.9 billion. *
  • According to our calculations, the volume of commissions received from conversion operations amounted to $ 179.7 million and $ 13.7 million for the spot and futures markets, respectively. That is, revenue from exchange operations alone is at $ 193.4 million per year. *

* According to coingecko.com and kraken.com.

COMPANY OVERVIEW

  • Increase in visits to the site from August 2019 to August 2020 amounted to 77.5% (from 3.25 million to 5.77 million users). **
  • On September 16, 2020, the company received a banking license in Wyoming. For the first time in the history of the United States, the cryptocurrency exchange was admitted to the classical financial system.
  • On October 22, 2020, the company announced the start of serving customers from Japan.
  • On January 14, 2020, Kraken entered the Australian market through the purchase of the local operator Bit Trade.
  • Kraken is included in the top 5 exchanges according to coinmarketcap.

* According to startup-map.berlin.

The main trigger for the growth in the value of Kraken may be a banking license obtained in the United States. It will give the company the opportunity to become one of the main guides for institutional investors in the world of cryptocurrencies.

According to our estimates, the company generates more than $ 200 million in revenue, which allows it to actively develop and enter new markets.

We believe that over the next two years, the company’s capitalization can grow to $ 10 billion, and it will catch up with its main competitor Coinbase (valued at $95 billion). Venture funds have invested in Kraken: Blockchain Capital, Digital Currency Group, Hummingbird Ventures and Money Partners Group.

CRYPTOMARKET PERSPECTIVE

The number of active addresses on the blockchain is growing steadily since its peak in December 2017. At the same time, the number of confirmed transactions per day in the 1st quarter of 2019 already exceeded historical values.

  • After the 2017 hype, public companies and investment managers have significantly revised their attitude towards virtual currencies. Bitcoin is becoming a popular inflation protection tool (its emission is limited to 21 million coins by an algorithm).
  • According to the U.S. SEC, at the end of June 2020, over 20 institutional companies owned crypto assets through the Grayscale Bitcoin Trust. Among such companies: Ark Invest ($ 4.5 billion under management), Boston Private Wealth Llc ($ 13.3 billion under management), Horizon Kinetic ($ 5.3 billion under management).
  • On August 11, 2020, MicroStrategy (Nasdaq: MSTR) announced the purchase of 21,000 bitcoins (about $ 250 million), declaring it a reserve currency to guard against inflation.
  • On October 8, 2020, fintech giant Square (NYSE: SQ) acquired 4,709 bitcoins for a total of $ 50 million.
  • On October 13, 2020, the management company Stone Ridge ($ 10 billion under management) announced the purchase of 10,000 bitcoins.