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PayPal’s recent jump into the crypto market is helping boost the current bitcoin (BTC) rally, according to Pantera, a leading cryptocurrency and blockchain investment firm.
In a letter to investors released on November 20, the venture capital firm compared the ongoing bull market to the last time BTC broke above $ 18,000 three years ago.
“Previously, the friction to buy bitcoin was quite onerous,” the letter notes, contrasting this difficulty with how e-commerce giant PayPal has now made it easier for millions of users to become potential buyers of bitcoin, ether, bitcoin cash and litecoin.
This is because all eligible PayPal account holders in the United States can now buy, hold and sell these cryptocurrencies – earlier than expected by the payment company, due to strong customer interest. Additionally, the company recently increased its weekly crypto buying limits to $ 20,000 from the initial $ 10,000.
“BOOM! The results are already visible,” wrote Dan Pantera, managing director and founder of the eponymous fund, in the November letter. “When PayPal went live, the volume started to explode.”
Panterra claims PayPal is already buying nearly 70% of the new bitcoin offering. With the Square Cash app’s routine bitcoin purchases, over 100% of all newly minted bitcoin is accounted for, Panterra claims.
The Bitcoin network issues new BTCs on a fixed, predetermined schedule. Only 6.25 new BTCs are mined every 10 minutes, following this year’s ‘halving’, an amount that will continue to decrease every four years until the 21 million BTC comes into circulation.
Panterra’s thesis centers on an understanding of the supply-side bitcoin market. The idea is that as the supply of BTC decreases, due to declining mining rewards, demand naturally increases, leading to price appreciation.
“When other larger financial institutions [PayPal’s] lead, the scarcity of supply will become even more unbalanced. The only way supply and demand balance is at a higher price, ”Panterra wrote.
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