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PayPal’s recent leap into the cryptocurrency market is helping to drive the current bitcoin (BTC) rally, according to Pantera, a major cryptocurrency and blockchain investment firm.
In a letter to investors released on November 20, the venture capital firm compared the ongoing bull market with the last time BTC soared above $ 18,000 three years ago.
“Previously, the friction for buying bitcoin was quite onerous,” notes the letter, countering this difficulty with how e-commerce giant PayPal has now made it easy for millions of users to become potential bitcoin buyers. , ether, bitcoin cash and litecoin.
In fact, all eligible PayPal account holders in the US can now buy, hold and sell those cryptocurrencies, sooner than the payment company anticipated, due to strong customer interest. Additionally, the company recently raised its weekly cryptocurrency purchase limits to $ 20,000 from the initial $ 10,000.
“BOOM! The results are already evident,” wrote Dan Pantera, CEO and founder of the fund of the same name, in the November letter. “When PayPal went live, the volume started exploding.”
Panterra says PayPal is already buying nearly 70% of the new bitcoin offering. Along with Square’s Cash App’s routine bitcoin purchase, more than 100% of all newly minted bitcoins are accounted for, Panterra says.
The Bitcoin network issues new BTCs on a fixed and predetermined schedule. Only 6.25 new BTCs are mined every 10 minutes, after this year’s “halving”, an amount that will continue to decline every four years until all 21 million BTC are in circulation.
Panterra’s thesis centers on a supply-side understanding of the bitcoin market. The idea is that when the supply of BTC decreases, due to lower mining rewards, the demand naturally increases, leading to an appreciation of the price.
“When other larger financial institutions follow [PayPal’s] lead, the shortage of supply will become even more unbalanced. The only way supply and demand balance is at a higher price, ”Panterra wrote.
