The much-cited shortage of Bitcoin becomes reality – And PayPal is to blame
The strong upward trend could be largely due to the market entry of PayPal, which is probably already causing a shortage.
PayPal’s entry into the crypto market could have dramatic consequences for the price of Bitcoin (BTC).
According to a new study by crypto investment firm Pantera Capital, a shortage of Bitcoin is the driving force behind the current price explosion, as the majority of newly created BTCs at The News Spy are bought up by the major payment service provider.
According to Pantera, the newly introduced integration of crypto-currencies at PayPal „already has a big impact“. PayPal alone is expected to account for almost 70% of all new BTCs.
Pantera refers to data from itBit:
„When PayPal introduced crypto-currencies, trade volumes exploded. The increased trade volume at itBit suggests that PayPal is already buying up almost 70% of all new Bitcoin within four weeks of its introduction“.
But that’s not all, because Pantera deduces from the available data that PayPal and payment service provider Cash App together even claim all new Bitcoin for themselves.
Bitcoin’s internal „monetary policy“ is programmed for deflation in the long term. With increasing adoption, this increases purchasing power on the one hand and on the other hand leads to a shortage in the amount in circulation. Pantera sees the latter mechanism as the reason for the parabolic upward trend of Bitcoin.
PayPal introduced crypto-currencies at the beginning of the month, although these are initially only available to US customers. They can be traded for up to USD 20,000 per week. In spring 2021, the service will be extended to the rest of the world.
The large payment service provider has 300 million active users, which makes PayPal’s move a big step towards making the crypto market leader truly suitable for mass use.
Pantera points out that it is currently much easier to buy Bitcoin than during the great crypto hype of 2017
In addition to PayPal, the American cash app and the trading platform Robinhood also offer uncomplicated access for the mainstream.
A larger adoption inevitably means higher prices. Although Bitcoin continues to be exposed to strong price fluctuations, the market-leading crypto currency has recently remained stable for a long period of time before the current climbing trend initiated a significant upward price movement.