PayPal and Square’s Cash App digital currency buying spree has reportedly triggered a bitcoin rally, according to a Benzinga report on Monday (Nov. 23).
Blockchain and digital currency investment firm Pantera Capital said in a report that after analyzing numbers from the cryptocurrency exchange iBit, it appears that PayPal and Cash App have bought almost 100 percent of all newly-issued bitcoins. itBit is run by Paxos, which is PayPal partner.
“When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins,” Pantera Capital indicated in the report.
It added that “supply scarcity will become even more imbalanced” as other financial institutions grow their own involvement in cryptocurrency.
Trading volume on itBit escalated to $26.57 million mid-November, a 500 percent surge. Comparatively, mid-October was $4.41 million, according to CoinGecko data.
Compared to 2017, Pantera calls this rally “much more sustainable,” in part due to an expanded variety of ways to buy bitcoin, like PayPal, Cash App and Robinhood, among others.
Gains in bitcoin were 155 percent since the start of 2020; ethereum surged 330 percent. Year-over-year, the S&P 500 went up just 20.11 percent, the Benzinga report indicated.
PayPal already has 300 million active users, whereas it took more than a dozen years for Bitcoin to grow its user base to 100 million, according to the Pantera Capital report.
The aggressive move move into cryptocurrency is “just the beginning of the opportunities” Paypal chief executive officer Daniel Schulman said at the company’s third-quarter earnings call.
PayPal is the biggest tech firm to accelerate its move into the cryptocurrency space. Its wallet holders can now buy, sell and hold cryptocurrencies like bitcoin, ethereum, bitcoin cash and litecoin. Robinhood started trading in digital currency in 2018, while Square has been involved since 2019.
The digital payments giant also received the “first-of-its-kind conditional Bitlicense” by the New York State Department of Financial Services (NYDFS).