Kraken is going after smaller, retail crypto traders, says The “Talented Mr. Ripley.”
We all know that small fish yields better, at least in the realm of trading. Smaller, retail customers are less price sensitive and tend to leave more margin on the table. Also, they disperse trading into smaller bets and are good risk management.
The Information spoke to Kraken’s new CEO, David Ripley, just after he took the helm. He was promoted from COO following Jesse Powell's 12-year reign.
The news comes as the crypto industry is amid a bearish period. More than $2 trillion has been wiped from its market capitalization, and the price of Bitcoin has fallen from close to $70,000 to $19,321.00 as of 2:37 pm EDT.
Ripley said the company is now focused on developing its platform for retail traders, which is good news.
But reaching more clients means more marketing spending, sometimes a lot more, especially considering how crowded the crypto exchange market is becoming and how much players like FTX, Binance, and Coinbase are spending already. It's fair to say that other players may be spending less now that digital assets are in the doldrums, but how long will this last?
Ripley said that in addition to marketing spending, Kraken will dive into acquisition mode, especially as prospective targets become cheaper during the downturn. This means going countercyclical to the power of two. We don’t like the targeting of NFT assets since we are bearish on the sub-segment, as you may see from the fact that we refrained from investing in OpenSea, though it’s been in our coverage for almost a year.
Ripley also mentioned that he will be growing revenues in the staking business, making Kraken start to look a whole lot more like Coinbase. Coinbase is perhaps one of the best-known crypto brands among consumers in the United States, and it, too, is relying on staking to stabilize its revenues.
But does it look more like Coinbase is a good thing? Not in our opinion: Coinbase has been bleeding users, and its revenue from customer trades has plunged from $2.28 billion in the fourth quarter to $655.2 million in the latest quarter.
We think Ripley should send the message that he is determined to win back market share, which Kraken has been losing in the past 8-10 months.
All in all, we think Kraken investors do not have much to lose from Ripley’s shake-up since the share is down massively already, from $66.5 to the low $30s.
All the best to Mr. Ripley.
