PayPal’s entry into the cryptocurrency market could have a dramatic impact on the price of Bitcoin (BTC).
In a report recently released, the cryptocurrency investment firm, Pantera Capital, says that the Bitcoin shortage is at the center of the recent price surge and that most of the newly mined BTC is being collected by PayPal.
PayPal’s new cryptocurrency service “it’s already having a big impact”, Pantera states, adding that the online payments platform is grabbing roughly 70% of all new BTC coming into circulation.
Citing data from ItBit, Pantera states:
“When the PayPal service went live, the volume started to explode. The increased volume of itBit means that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins.”
According to Pantera, data suggests that PayPal and Cash App combined are buying all of the newly issued Bitcoin.
Bitcoin’s monetary policy is programmed to be deflationary over time. With large-scale adoption, that leads to increased purchasing power and supply shortages. Pantera claims that it is the latter that is contributing to the parabolic rise of BTC.
PayPal launched its cryptocurrency trading services in the US earlier this month, allowing your customers trade up to USD 20,000 weekly. The service will be available globally in early 2021.
The online payment merchant has 300 million active users, which makes your foray into digital currency an important step towards its adoption.
Pantera says that it is much easier to buy Bitcoin now than it was during the last bull market in 2017. In addition to PayPal, platforms for buying Bitcoin and other retail digital currencies now include Cash App and Robinhood.
More widespread adoption means that the digital currency is more likely to maintain higher price levels. Although Bitcoin remains very volatile, it carved out an unusually long period of stability before catapulting to higher levels in the past two months.