According to Jesse Powell (CEO and founder of the Kraken exchange) Bitcoin will prove to be better than gold.
He said this in a short interview with Bloomberg in which he analyzed the historical moment being experienced by Bitcoin and cryptocurrencies.
Sure enough, this was the year that institutional investors opened their doors to Bitcoin. MicroStrategy and MassMutual are just two of the companies that have chosen to allocate their capital in BTC. In this regard, the CEO of Kraken states:
“I think a lot of institutional investors had a lot of cash on their balance sheet, a lot of publicly-traded companies are now acquiring bitcoin, accumulating a position. I think the question historically has been: how do you justify having such an exotic volatile asset on your balance sheet? And this year it’s been: How do you justify not having bitcoin on your balance sheet with the kind of performance that we’ve seen?”
According to Jesse, the dollar has also proven to be very volatile:
“And with the kind of inflation that we’re seeing now in the market. Holding dollars seems like a very risky prospect compared to something like bitcoin which is completely finite, predictable and even a greater store value than something like gold.”
He continues by saying that people don’t believe in fiat currency now, because too much is being put into circulation and economic stimulus is likely to continue. That’s why they are investing in other stuff.
This explains institutional investors buying Bitcoin, but this is not the reason why the volatility of BTC, defined by the guest as “The Achilles Heel” of the cryptocurrency, is going to drop. In fact, according to Jesse Powell, Bitcoin’s volatility will not decrease until BTC replaces all the world’s coins (a rather suggestive scenario). He adds:
“Between 28,000 and a million dollars a bitcoin you’re going to have a lot of volatility. That’s potentially another decade, so I think that volatility is not going to end anytime soon. Bitcoin certainly is not for the faint of heart”.
Jesse Powell: Bitcoin is not the Wild West
But there’s more to Bitcoin than that. For Jesse Powell, those who want to invest in cryptocurrencies should also look to Ethereum. Ethereum’s performance in this 2020 has been astonishing, certainly also due to the boom in the DeFi sector. Decentralized Finance, according to the CEO of Kraken, has been responsible for removing intermediaries from contract stipulation and this is:
“A huge success story”.
2021 will be the year of regulation. Jesse Powell explains that the industry is not the Wild West as people are trying to make it out to be. On the contrary, the nations where the markets are largest see almost regime-like regulation, while others simply enforce the rules that are already there. Certainly the industry has changed a lot since the year Kraken was founded, 2011. Jesse Powell adds:
“Regulators are getting more and more savvy. I don’t think that there’s a risk of any kind of hasty kind of clamp down on the market, I think that they’re getting better at understanding the risks, they’re getting educated, they understand that this is a remarkable technology not unlike the internet, that has the potential to completely change the world”.
Bitcoin and cryptocurrencies can change the world because they will reach even the unbanked, Powell argues. In fact, a quarter of the world’s population does not have a bank account. Cryptocurrencies solve this problem, and therein lies their potential. That’s why governments, particularly that of the United States, won’t want to “crush” cryptocurrencies.
In reality, the facts say that regulation is likely to be more stringent, especially in the United States. This is precisely where exchanges risk being put in the position of being unable to transfer funds to anonymous wallets, causing one of the strengths of cryptocurrencies to fail.
Meanwhile, the case of the SEC’s lawsuit against Ripple, and the consequences on the price of XRP, which literally plunged, show how national governments can hurt the industry.
There is still much work to be done in these areas.
