Crypto outlook as bitcoin price leaps above $19K

Kraken Co-founder and CEO Jesse Powell joins Yahoo Finance Live to discuss the latest with Bitcoin.

Video Transcript

AKIKO FUJITA: The price of Bitcoin hovering below that record it hit on Monday. But we are seeing some gains today on partially some news coming out of Washington on Wednesday, a group of Democratic lawmakers introducing a new bill requiring stablecoin issuers to obtain a banking charter and approval from the Federal Reserve. Let’s bring in Jesse Powell, he is a co-founder and CEO of Kraken, joining us from Los Angeles today. Jesse, it’s great to talk to you.

It feels like every conversation we have about Bitcoin these days is about how more and more it’s becoming institutional. With a lot more institutional investors coming in, we’ve heard about the PayPal, Square effect as well. This latest bill coming through in Congress, and we should point out, it’s just a proposal, is that a positive, do you think, for this phase? Of course, it sounds like the purist would say, well, no, regulation is not warranted here.

JESSE POWELL: Right, I think that, you know, this is another case of maybe regulators overstepping. And it looks like this bill doesn’t have legs. So hopefully, it won’t be passed. But, you know, ultimately, what we want in crypto is financial inclusion. We want access. And this bill seems like it would be reducing access for consumers.

And I think it’s really unnecessary, overly broad. And I think we can get by without it. And there’s not a need to sort of introduce additional barriers toward people participating in the crypto economy.

ZACK GUZMAN: Yeah, and Jesse, let’s talk about the enthusiasm that we’ve seen playing out here as Bitcoin was kind of flirting with those all-time highs here, approaching that $20,000 level. I mean, when you see accounts on your platform on Kraken, what kind of enthusiasm, what kind of new user is coming around this time, maybe relative to the last time we were trading around these levels?

JESSE POWELL: Last time, the rally was heavily retail driven. This time, we’re seeing a lot more institutional interest. And I think that that’s coming from just to getting– getting it be more acceptable. Because you have people sticking their neck out, like Michael Saylor, Paul Tudor Jones, you know, Square. You have large institutions, publicly traded companies, buying tens or hundreds of millions of dollars of Bitcoin.

And I think the question this time around is more about, you know, how can you justify to your portfolio, to your investors not having a position in Bitcoin?

AKIKO FUJITA: And Jesse, you know, it feels like when we go back to 2017, the conversation was about whether Bitcoin is gold 2.0. You’ve said that there were some calls that it warranted half a million dollar price tag. You think it’s much higher than that? What do you think is the price that justifies Bitcoin?

JESSE POWELL: You know, well, I think we’re going to continue to go up and to the right for a while. It doesn’t seem like the money printing is going to stop anytime soon. I think we’re going to see a lot more printing, a lot more businesses closing over the next 6 to 12 months because of the COVID response. So I think you’re going to see more bailout checks, more stimulus. And I think that is going to cause more countries to stop using the dollar, more people to stop looking at the dollar as a store of value, more people to move their money from savings into a safe haven asset like Bitcoin.

ZACK GUZMAN: You know, we talk about it, Bitcoin, so much here but. For the real crypto enthusiasts out there, a lot of attention has been being paid to a lot of the DeFi projects around Ethereum and smart contracts there. And Kraken’s donated, what, half a million dollars to some of these projects that we’ve seen pop up. What do you think right now is different to, as we’ve moved so far in terms of projects working on those smart contracts using the Ethereum blockchain here? What’s different this time around when you look at that kind of space?

JESSE POWELL: So there’s a lot more innovation happening, the technology has come a long way. You know, part of what’s really interesting about this space is that it moves so quickly. And there are things happening, you know, now that just were not imaginable a few years ago. And I think slowly we’re starting to see the components of the traditional financial system and these middlemen be replaced by smart contracts, by computer code, which is completely reliable, completely auditable, fully transparent.

And through that, you have much less counterparty risk. You have less risk that someone is able to steal your money in the process of facilitating your transaction. So I think DeFi is really the way of the future. We’re investing in that. And, you know, it’s still very early days, there’s still some risks, I want to be clear about that. But this is definitely the way of the future.

ZACK GUZMAN: And Jesse, to you, I mean, just listening to kind of your explanation on where Bitcoin’s price goes. Obviously, a lot of attention being paid to, you know, spending right now, inflation. Of course, it’s kind of where Bitcoin came from. But when we talk about the other side of it, payments catching a lot of intrigue, whether you look at Paypal’s crypto efforts, Visa’s PayPal efforts, do you think that there’s a little bit of a strange kind of double– seeing both of these work?

Is Bitcoin looking at it as a store of value, but also as payments? How do those work together, and do you think that maybe we’ve moved on from it maybe being more important in the payment side versus the store of value side?

JESSE POWELL: I see Bitcoin today as largely a store of value. Of course, it’s still fantastic as a payment method. If you’re sending larger amounts of money, you know, if you’re just buying a coffee, it’s a bit cost prohibitive because of the transaction fees. But you can still send a $10 million Bitcoin transfer on Saturday at midnight. You know, and you can’t do that with a bank. So it’s definitely solving some use cases for payment transfers.

In terms of store of value, I think we will see kind of second layer solutions or off-chain payments be used with Bitcoin, where, you know, that’s Bitcoin that exists in your PayPal account or in your Kraken account. And that can be moved between different user accounts without actually using the blockchain itself. And then, of course, you can always withdraw your coins back to your own wallet, back to the blockchain If you need to.

But that dramatically reduces the cost of sending transactions. And you can still have it as a store of value.

ZACK GUZMAN: All right, we’ll see what happens there. Clearly a very exciting time in the crypto space as you’re talking about all these projects moving forward. The CEO and co-founder of Kraken, Jesse Powell, thanks again for joining us.

JESSE POWELL: Thanks for having me.

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