Cryptocurrency investments are enticing options for those looking to diversify and gain exposure in one of the newest sectors. Crypto is famously volatile, though.
One measure of Bitcoin’s volatility reached its highest point in 14 months during June of 2021 when prices fell to a five-month low. Bitcoins annualized 30-day volatility was 117.04% on June 9. In May 2021, the price of Bitcoin fell 30% during a single day, ending with a value 12% lower than the day before.
Fortunately, there’s more to crypto than Bitcoin; Kraken is a rising force in this segment offering a platform that allows investors who are new to cryptocurrency a less volatile way to learn about and trade crypto. The platform launched just two years after Bitcoin came into existence. Users can trade more than 50 types of cryptocurrencies (including Bitcoin) while enjoying low fees and access to educational materials designed to help those new to the world of crypto understand how to succeed in the world of crypto investing.
Cryptocurrency is now a global phenomenon that many financial experts say has the potential to disrupt financial systems. Crypto isn’t secured by precious metals or backed by a government, making it out of reach for government regulators.
A crypto exchange allows investors to buy and sell cryptocurrency. It’s also possible to trade one cryptocurrency for another or purchase crypto with currency. Exchanges show the most up-to-date pricing for all cryptos offered on the platform. It’s also possible to convert crypto back into cash and leave it in the account or withdraw it to a bank account.
Cryptocurrencies use blockchain to record and manage transactions. Blockchain eliminates the need for a central authority by spreading operations across a wide network of computers. Blockchains are made of data blocks that are chained together. New data creates a fresh block, which is chained onto the previous block. This technology is ideal as an incorruptible ledger for transactions. No person or group of people has 100% control over the blockchain. The data entered is irreversible, so cryptocurrency transactions are viewable by anyone and permanently recorded.
Cryptocurrency is a payment form that can be exchanged for goods and services. Companies may issue their own currency (tokens), which may be traded for something the company provides.
Kraken is one of the largest bitcoin exchanges in the world. It is playing an integral roll in the adoption of cryptocurrency. The Kraken platform provides investors with a means by which to safely and easily trade Ethereum, Bitcoin, and more than 40 other digital assets.
The company was founded in 2011 and has more than seven million users. Professional charting tools provide advanced traders with the market information they need to take advantage of the rising popularity of cryptocurrency. New investors have access to a suite of educational materials to help arm them to become successful crypto investors.
Kraken users also have access to 24/7 live chat support with Kraken customer service experts, making it an ideal entry-level platform for investors new to the world of buying and selling cryptocurrency.
Kraken’s trading fees are below average, and they begin to drop quickly once a trader starts doing more than $50,000 a month in volume. Kraken’s instant buy interface charges a 2% fee. This fee is a bit below average among competitors, which helps the platform attract a steady stream of new users.
Overall Kraken is a good platform for American traders or organizations that want to be fully compliant and also execute hundreds of trades a month.
Kraken was one of just two crypto exchanges also legally chartered as U.S. banks in 2020. The company’s first big equity raise produced $5 million in a Series A round in March 2014. It’s Series B financing round happened two years later, and the amount was undisclosed.
In 2016, Kraken announced two acquisitions: CleverCoin and Glidera. The company acquired the trading platform Cryptowatch in 2017.
By 2019, Kraken’s valuation grew to $4 billion. The company raised $100 million through a direct share offering. They raised $13.5 million from individual investors via BnkToTheFuture.
A growing distrust of national currencies as the Federal Reserve continues to create money could continue to fuel the rise of crypto. Kraken is in a position to serve the 25% of people in the world who don’t have a bank account. Institutional investors and publicly traded corporations are adding new positions in crypto, as well.
Kraken works well for beginning investors due to its lower trading fees and wide range of cryptos. It’s easy to get started buying and selling crypto with a small $10 minimum initial purchase. The platform allows users to quickly make deposits and withdrawals, measure their portfolio’s performance, and keep an eye on all crypto investments in one place.
The platform may be especially enticing to American crypto investors since the company’s headquarters are located in the United States and the firm is committed to regulatory compliance. Kraken also offers advanced trading features like futures and margins, which makes it an excellent choice for sophisticated traders.
Kraken boasts some of the most robust security among crypto platforms. All crypto owned by Kraken investors is held in cold wallets, safely out of reach of hackers and thieves. Kraken maintains full reserves and places a high value on healthy banking relationships while remaining 100% in legal compliance.
More experienced investors have access to the advanced analytical tools they need to execute complicated and large trades. The platform offers users the ability to loan out or “stake” coins for rewards, as well.
Experienced crypto investors in the U.S. must have large amounts of assets to take advantage of Kraken’s staking and margin offerings. Investors outside of America don’t have the same restrictions and can use advanced trading features at will.
High net worth U.S.-based investors can access margin trading functions on the Kraken platform, which allows them to borrow money to fund crypto purchases. Existing investments serve as collateral. While margin trading allows for potentially larger gains, margin calls could cause huge losses for investors if prices drop suddenly.
Kraken investors pay rollover margin fees as well as opening margin fees that range from 0.01% to 0.02%, depending on the base currency.
Rollover margin fees, charged for maintaining a position, start four hours after opening a position and apply every four hours after. Margin trading on crypto platforms is a rare feature that helps Kraken stand out among the competition.
Crypto is an exciting investment option, but it’s also volatile, expensive, and you can’t buy it using a traditional brokerage account.
While it’s easy to purchase cryptocurrency as an investment using a crypto exchange platform, it may be more advantageous to invest in the infrastructure that investors use for cryptocurrency investments. It’s possible to invest in crypto to take advantage of the sector’s growing popularity without owning coins. In fact, investing in the technology that powers the sector could reduce exposure to crypto’s trademark volatility while providing protection from losses.
Indirect exposure to crypto could be an ideal alternative for many retail investors. A number of publicly traded businesses in a variety of sectors provide services that allow consumers to pay with crypto or store their crypto. Some companies have added Bitcoin to their balance sheets, as well.
Investing in companies such as PayPal and Square that allow customers to trade cryptocurrency is another way to take advantage of the growing popularity of cryptocurrencies. Companies like Galaxy Digital and Riot Blockchain focus on the technology powering crypto, instead of cryptocurrency itself. Many big tech companies such as Amazon, SAP, Microsoft, Google, and IBM use blockchain for a variety of security-related applications.
Computers that solve equations for blockchain technology require graphics processing units (GPUs). Investing in companies that produce this type of hardware is another way to get involved with crypto.
Kraken is one of many cryptocurrency trading platforms. It is well-established, has many users, and its competitive fee structure and advanced trading tools means it could be poised for continued success going forward.
It’s not always easy to get involved with investing in niche segments like cryptocurrency. Fortunately, those interested in taking advantage of the excitement surrounding crypto and the technology that powers it have many options beyond directly purchasing cryptocurrency.
Kraken co-founder Jesse Powell indicated in a June 2021 interview that he’s considering a traditional initial public offering (IPO) as opposed to a direct offering (DPO), so investors interested in a pre-IPO investment in Kraken may be in an excellent position as the company moves forward with their plans.
The Spaventa Group can help you purchase stock in this sector. Contact The Spaventa Group today to learn more about investing in Kraken and other opportunities in the pre-IPO private market.