PayPal’s entry into the cryptocurrency market could have a dramatic impact on Bitcoin (BTC) price.
In a newly released report, crypto investment firm Pantera Capital says a bitcoin deficiency is at the heart of the recent price hike and that most of the newly minted BTC is being picked up by PayPal.
PayPal’s new crypto service “is already having a big impact,” claims Pantera, adding that the payment merchant picks up around 70% of all new BTC in circulation.
Citing itBit data, Pantera claims:
“When PayPal went live, the volume exploded. The increase in itBit volume means that PayPal is already buying almost 70% of the new Bitcoin offering within four weeks of launch. “
According to Pantera, the data suggests that PayPal and Cash App together are buying up all of the newly issued Bitcoin.
Bitcoin’s monetary policy is programmed to be deflationary over time. With broad acceptance, this leads to higher purchasing power and supply shortages. Pantera claims the latter is contributing to the parabolic surge in BTC.
PayPal launched its crypto trading services in the US earlier this month, which allows customers to trade up to $ 20,000 per week. The platform will be launched worldwide in early 2021.
The online payments merchant has 300 million active users, making its entry into the digital currency an important stepping stone for adoption.
According to Pantera, it is now much easier to buy Bitcoin than it was during the last bull market in 2017. In addition to PayPal, Cash App and Robinhood are now among the retail ramps for Bitcoin and other digital currencies.
Wider adoption means that the digital currency is more likely to maintain a higher price level. Although Bitcoin continues to be very volatile, it achieved an unusually long period of stability before catapulting higher in the past two months.