PayPal’s decision to integrate crypto-currencies into its platform may augur well for Bitcoin’s price, as its user base could triple.
The price of Bitcoin (BTC) has once again surpassed the USD 13,000 mark after yesterday’s PayPal announcement caused a powerful spike that brought the price to a new annual high.
Currently close to USD 13,100, Bitcoin’s price has risen almost 10% since the announcement and BTC is now close to overtaking PayPal as the largest asset 21 by market cap. (Update: Bitcoin Era is now more than PayPal by market cap)
For the first time since 2018, Bitcoin’s balance sheet in the exchanges fell below 2.5 million
The announcement that PayPal will integrate crypto-currencies into its platform comes two weeks after Square, another payment giant, announced its own foray into crypto space by investing approximately 1% of its assets in Bitcoin.
According to Lanre Jonathan Ige, researcher at Amun AG, the continuous trend of high profile investments will be key to attract institutional interest in Bitcoin. Ige said:
„Corporations tend to follow trends and we can expect other corporations to follow the example of Square and Microstrategy as asset returns continue to impress.
However, the recent news from PayPal is more likely to draw the masses to Bitcoin than to the institutions. This is because PayPal can bring a more widespread audience up to speed with cryptomoney as an investment vehicle for now and as a payment method in the future, which has been one of the main focuses of the Bitcoin community when it comes to mass adoption.
PayPal should boost Bitcoin’s user base
According to Glassnode data, Bitcoin currently has over 187 million users or „hodlers“. Although it’s an impressive figure, cryptomoney analyst Willy Woo pointed out that this pales in comparison to the 487 million users that PayPal has.
Total number of Bitcoin HODLers.
With the integration of Bitcoin, PayPal brings the name of cryptomoney to a conventional audience. While at the moment it’s only possible to buy, sell and maintain Bitcoin through PayPal, the company announced that it will add payments and transfers in cryptomonics in 2021. Once this happens, it could cement Bitcoin’s reputation as a payment and remittance mechanism.
Transactions through PayPal and other centralized platforms could even become one of the ways Bitcoin can scale to a more conventional user base. Centralized transactions (along with other methods such as side chains and the Lightning Network) could be used to ease congestion in the Bitcoin block chain, allowing it to be used only for larger transactions that require more security, transparency or immutable proof of ownership.
Bitcoin is aimed at outperforming banks
While it seems that payment processing companies and crypto-currencies are finding more momentum over time, the same cannot be said for banks and this struggle is reflected in their share price.
Major traders say Bitcoin’s logarithmic chart points to a bullish cycle similar to that of late 2017
Jon Erlichman, technology correspondent for BNN Bloomberg, noted that assets such as Bitcoin, Ether and shares of payment companies such as PayPal and Square were performing very well this year, but since the COVID-19 pandemic, financial stocks have underperformed.
Bitcoin and Ethereum’s performance so far this year Source: Digital Assets Data
To date, Bitcoin and Ether prices have appreciated by 80.5% and 217%. Meanwhile, PayPal went up 99% and Square 186%. Banks like JPMorgan and Bank of America, on the other hand, have lost 28% and 32% respectively. Citigroup has seen the value of its shares fall by 46% and Wells Fargo by 58%.
Bitcoin now has a 7% chance of surpassing its historic high of $20,000 in the next 2 months
As for Bitcoin, it remains one of the best performing assets around, outperforming gold and the S&P 500 by a wide margin this 2020.
Macro-asset performance in 2020.
As more people interact with Bitcoin as an investment vehicle, consumers may turn their backs on banks and invest more in cryptosystems.
According to experts, Bitcoin may even benefit from what some call the „Robinhood effect,“ a phenomenon in which retail investors with disposable income buy an asset through investment platforms