Are we now seeing the coming of age of Bitcoin? With the announcement by PayPal (NASDAQ:PYPL) that it will now allow cryptocurrency buying, selling and shopping on its network, and that it will support a number of the major cryptocurrencies, Bitcoin investors must be rubbing their hands with glee. It certainly looks like the move could drive the wider adoption of cryptocurrencies.
PayPal has 346m users, 26m merchants and is the 20th largest bank by deposits. Its decision looks set to open a gateway for people to use cryptocurrencies in their everyday transactions. It could spark renewed interest in Bitcoin by both consumers and banks, just as the news of Facebook (NASDAQ:FB) launching its own cryptocurrency (Libra) did last year.
“It’s not just the consumer-facing behemoths such as PayPal and Facebook that are looking to bring crypto to the mainstream, but more financial institutions are buying Bitcoin and other digital assets as a move to diversify their portfolios,” says Constantin Kogan, Managing Director at Wave Financial Group. “2020 is fast becoming the year of crypto acceptance and we see 2021 as the year of mainstream adoption. All of this is bullish for the price of Bitcoin and it is safe to assume that BTC will remain a strong bullish trend.”
Kogan says a year end price of $14,000 is easily achievable, as the market hasn’t fully absorbed all the positive news.
One important detail that some Bitcoin watchers have pointed out is that while PayPal users will be able to buy and sell cryptocurrencies using the platform, they will not be able to transfer these digital assets to other users or to a digital currency wallet. Regardless of this, it is a positive, high visibility development that can only be beneficial for the Bitcoin price.
Is this a landmark moment for Bitcoin prices?
We are seeing some subtle changes in the dynamics of the cryptocurrency market as a consequence. Several of the top altcoins have outperformed what has already been a seriously big rise for Bitcoin. The Bitcoin Dominance Index is still growing though: 62% of the value in crypto is held by Bitcoin, which is a gain of 3.5% over the last week. In other words, the dominance of Bitcoin among its peers, if it could really be said to have peers, is increasing.
“There’s been something of an avalanche of interest in Bitcoin in recent weeks from household name investors,” says Nigel Green, CEO of deVere Group. “Investor activity is picking up considerably with various on-chain metrics and ongoing – and heightening – global political, economic and social turbulence suggesting that there will be a price rise before the end of the year. There’s a growing sense that we’re set to experience a mini-boom similar to that at the end of 2017.”
Bitcoin prices are yet to catch up with investor interest, according to Green, but this could only be a matter of time, as many investors will not want to sleepwalk towards year-high prices in the run up to the end of 2020.
Bitcoin is up from $10,500 at the start of the month, to almost $13,000 at the time of writing. The PayPal adoption scenario seems to be a stronger impetus than political turbulence, but it will be interesting to see if there is further purchasing of BTC as investor sell out of USD in the run up and immediate aftermath of the US election. Gold futures have also been rising in the run-up to the election, but we have not seen anywhere close to the price action we have seen from Bitcoin in the last couple of weeks.