Founded in July 2011 as a venue for buying and selling Bitcoin, Kraken Cryptocurrency Exchange has established itself as one of the most liquid and reputable cryptocurrency exchanges in the industry.
That reputation, although never in doubt, was further reinforced in 2019 after Kraken was listed by U.S-based asset manager, Bitwise, as one of the top ten crypto exchanges with real trading volumes and market integrity.
In a recent interview, Coinfomania spoke with Pierre Rochard, Bitcoin Strategist, at Kraken Exchange. We discussed his role at the world’s leading crypto exchange involves, why he’s bullish on Bitcoin, the recent crypto market downturn caused by the COVID-19 pandemic, and the problems that must be rectified before Bitcoin reaches mass adoption.
The Role of a Modern-Day Bitcoin Strategist
The crypto industry has undoubtedly created several job roles that never existed before, so one might wonder what a Bitcoin strategist does.
Pierre explained that in line with Kraken’s mission to accelerate the adoption of cryptocurrency, he focuses on Bitcoin just as each cryptocurrency project has a unique approach to attracting users and building their ecosystem.
“As the oldest and most successful cryptocurrency, Bitcoin has a proven adoption strategy: payments system of last resort and savings system of first resort. My role is to communicate Bitcoin’s strategy to internal and external stakeholders and to consult with the teams across Kraken implementing and supporting Bitcoin products.”
Kraken’s Surging Volumes Shows High Interest
Speaking on the reasons why spot and futures trading volumes on Kraken has surged in recent weeks, Pierre rightfully described Kraken as one of the most liquid exchanges in the world “thanks to its long history of excellent service, low fees, versatile funding options, and rigorous security standards.”
For Kraken Futures, he explained that Kraken’s ‘simple and intuitive user interface, ability to fully integrate with Kraken’s custody and support, as well as the ability to trade crypto with up to 50x leverage’, makes it a preferred trading venue for traders of different calibers.
Bitcoin as Sound Money and COVID-19 Effect
Anyone who follows Pierre Rochard on Twitter would be in no doubt regarding his bullish belief that Bitcoin is sound money, and would become increasingly significant in the years ahead.
He tells the story of his early Bitcoin days and the properties that attracted him to the leading cryptocurrency.
“When I first researched Bitcoin in 2013, I was fascinated with digital cash having a fixed issuance schedule, as I had been a precious metals proponent since learning about the Austrian School of economics in 2005.”
But the issuance model wasn’t all that Bitcoin had to offer. Pierre added, “As I learned more about software engineering, it became clear to me that Bitcoin’s ruthlessly minimized argument surface and peer-to-peer network governance with full nodes are the two properties that enable Bitcoin to be a socially scalable sound money.”
The current state of the global economy and the COVID-19 pandemic has served as a perfect well to measure Bitcoin’s ‘safe haven’ and ‘store of value’ proposition. Being created in the aftermath of the 2008 financial crisis means that the cryptocurrency is existing for the first time in the middle of economic chaos.
How has Bitcoin fared so far? Pierre reiterated that “Bitcoin’s inherent properties are unaffected by exogenous shocks like COVID-19, but decentralization is indeed more valuable in a crisis like this one.”
“What did make me more bullish in March was seeing the massive volume, on March 12 there was $5 billion worth of bitcoin changing hands in 24 hours per Bitwise Asset Management, $500 million of that was at Kraken.”
That the “the crypto exchange industry as a whole proved itself to be robust under unprecedented demand,” is a sign of massive growth Pierre believes.
Factors Hindering the Mass Adoption of Bitcoin
“Economically, the only bottleneck for mass adoption of Bitcoin is liquidity. This ranges from being able to buy and sell billions of dollars worth of bitcoin without moving the price, to being able to use bitcoin to buy and sell goods and services,” Pierre explained on the subject of factors hindering Bitcoin’s mainstream adoption.
On the other hand, the good news, according to him, is that “Liquidity has in the past been improving by orders of magnitude every few years. We can expect that trend to continue with coming bull markets. Monetization of a new asset is a time-consuming process of familiarization,” he added.
The other bottleneck would be with regards to engineering and scaling the Bitcoin network with Lightning to allow for more efficient use of resources.
Pierre expressed a conviction that “once channel management is fully automated, Lightning will provide a better UX than current fintech offerings like Venmo [and] this will help onboard the next wave of mainstream consumers.”
Meanwhile, on the public policy side, Pierre mentioned a known fact that in the United States and many other countries, capital gains tax applies even when you are using bitcoin to buy goods and services.
Such a scenario “creates an economic, recordkeeping, and reporting burden that disincentivizes using bitcoin for payments.” On the other hand, he argues that “excluding cryptocurrencies from capital gains tax would accelerate adoption.”
Is the Bitcoin Halving Priced in and How High Could Price go Post-Halving?
“By definition, the halving is not priced in, because it has not happened yet,” Pierre said on the subject before shedding more light on why he holds that view.
“This [the halving not being priced in] is counter-intuitive because everyone is so confident that it will happen. It’s in the code! But being confident that something will happen is fundamentally different from something having happened. The former cannot “price in” the latter.”
Putting Qualitative logic aside, Kraken’s Bitcoin Strategist cited evidence from PlanB (@100trillionUSD on Twitter) that past halvings were not priced in until long after they occurred, not before they occurred.
Based on that same model, “we can forecast that bitcoin’s price will oscillate around $100,000 until the 2024 halving.,” Pierre concluded.
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