Pantera Capital—a cryptocurrency investment firm—released an analysis explaining the spike in BTC price. Their conclusion? A Bitcoin scarcity is creating the need for higher buy orders. Their reason? PayPal’s massive user-base is behind the shortage.
On October, 21st, PayPay revealed its plan to implement crypto into its payment and financial services. Then, just earlier this month—after creating a waiting list—they quickly opened up their platform for buying, selling, and trading crypto including, of course, Bitcoin.
The announcement alone sent BTC from its $11k mark to $13k. But, this was just the beginning.
Then—according to Pantera Capital—when PayPal’s crypto service went live on November 12th many of its 300 million users—the majority in the U.S. where the service was launched—became responsible for 70% of BTC buy orders in a matter of weeks.
How did this happen so quickly? PayPal users already have a verified account and a linked bank or debit card. So, a KYC process that usually takes days or sometimes weeks on a cryptocurrency exchange now only took minutes to buy, sell, and trade BTC.
As demand skyrocketed on one platform the BTC supply decreased on other mainstream platforms like Cash App, making the price increase, according to Pantera Capital.
“When other, larger financial institutions follow their lead, the supply scarcity will become even more imbalanced. The only way supply and demand equilibrates is at a higher price,” says Pantera Capital.
What does the mean for the future of Bitcoin? Well—using this logic—as more users are seamlessly able to buy BTC and more businesses like PayPal open its doors, then the higher the BTC price will go.
PayPal crypto trading is only open to U.S. users but plans to go global in 2021.