One of the biggest crypto exchanges in America has sent out an email to prominent clients and high-net-worth individuals announcing a potential investment opportunity. In the email, Kraken made it clear that the minimum investment investors can make is $100,000 and gave its shares a total price tag of $4 billion. A third-party financial services firm will handle the private listing, as well as undertaking the vetting procedures of all interested investors. Clients have until December 16th to state their interest in taking part in the private listing.
Seeking Financial Stability
The year-long crypto bear market has taken its toll on all firms operating in the crypto space – both big and small. ICO projects have had millions reduced to hundreds in the space of 12 months, and larger firms are recording heavy losses. Kraken is likely considering this private listing in a bid to secure its finances and reduce its reliance on crypto trading as its sole source of income. Considering the current state of Cubits, an influx of cash to see out this bear market wouldn’t be a bad thing for the crypto exchange.
Rather Overpriced Stock
Giving itself a $4 billion valuation is quite an overstatement in itself. Considering the fact that the crypto market is currently suffering from the effects of a bear market, Kraken is hardly operating at full tilt. Back in October Coinbase was valued at $8 billion, but the market conditions were very different and Coinbase deals with much larger trade volumes.
When you compare the two, either Coinbase was severely undervalued or Kraken is massively overpriced. When you weigh up the differences between the two exchanges, Coinbase is far superior in terms of product offering, technology, and customer base, leading us to believe that Kraken is overestimating its price.
Another factor that could go against Kraken is its impending lawsuit from UnitedCorp. During the Bitcoin Cash hash war, Kraken allegedly spread FUD about the Bitcoin SV project and this misinformation could have impacted the outcome of the battle. UnitedCorp has filed a lawsuit against Kraken, along with Roger Ver and Bitmain, for their roles in the hash war and it looks like UnitedCorp has a very strong case and could even win. If UnitedCorp wins the lawsuit, Kraken’s $4 billion valuation could take a serious hit and cause it to slide down to more realistic levels – around $2 billion.
Either way, if you have more than $100,000 kicking around and you’re an accredited investor then you could have the option to buy into the crypto market from a different angle. Rather than having direct exposure to crypto, you can get your hands on a slice of a firm that makes crypto trading possible. Whatever decision you make, do a lot of research before you drop that amount of cash on Kraken – Coinbase would make a far better buy.