With the price of Bitcoin roughly $1,500 away from its all-time high, the king of cryptocurrencies is presently enjoying the most unimaginable momentum as the market is greeted with optimism on several positive news. Today, I came across an exciting headline to the effect that PayPal, the powerful online payment processing platform, was responsible for the buying of about 70% of all the mined Bitcoin last month.
Forbes.com
Pantera, the crypto hedge fund company which made the revelation to the public, hinted that PayPal was buying an estimated $20m worth of Bitcoin and other cryptocurrencies daily for most part of last month. The aim of PayPal is to have enough reserve of Bitcoin to first meet up with the demands of its teeming users in the US and later those in the other parts of the world as soon as its crypto services become full-scale.
While it has been predicted by many analysts that PayPal's coming into Bitcoin holds lots of promises for the crypto market, only a few had imagined how fast the involvement of PayPal would have positive impact on the price of Bitcoin. To begin with, Pantera have observed that the aggressive buying of Bitcoin courtesy of PayPal has resulted to a scarcity of Bitcoin. The number Bitcoins sitting in the open market has declined significantly following the involvement of PayPal in a buying spree. If the scarcity continues, we should expect a demand and supply disequilibrium that will most likely push the price of Bitcoin higher.
Another implication of the buying behaviour of PayPal is the potential it has for onboarding hitherto skeptical investor into the crypto game. One huge setback that the crypto market has suffered for a while is the barrier of entry and unregulated middlemen. The involvement of PayPal is expected to onboard many users and eliminate the bottlenecks that are ordinarily associated with using cryptocurrencies by first timers.
Lastly, PayPal's aggressive purchase is creating a solid support base for Bitcoin. For many of the purchases that were made around the $15k range, it becomes more difficult for Bitcoin to retract below that range and makes a case for an undervalued Bitcoin. It is even more interesting to see that many whales and retail investors are still buying Bitcoin at $18,500. This, according to many analysts, could potentially take Bitcoin far above $25k in the coming weeks. The point is, whether one likes PayPal or not, its involvement will shape the direction of the crypto market in the coming days.