The Bitcoin (BTC) price surpassed the $ 13,000 mark again after the PayPal announcement yesterday triggered a massive rally that pushed the price to a new high in 2020.
Bitcoin is currently valued at around $ 13100, Bitcoin has risen almost 10% since the announcement, and Bitcoin is now close to overtaking PayPal as the 21st largest asset by market value.
PayPal’s cryptocurrency announcement came two weeks after Square, another payment giant, announced a Bitcoin attack, investing almost 1% of its assets in Bitcoin.
According to Enri Jonathan Age, a researcher at 21Shares, the current trend of large investments will go a long way in driving the company’s interest in bitcoin. Iggy said:
“Companies often follow trends, and we can expect a number of other companies to follow Square and Microstrategy’s management as returns continue to affect.”
However, the latest news from PayPal is likely to lead the public to bitcoin instead of corporate bitcoin. This is because PayPal may attract a wider audience to use cryptocurrency as an investment tool now and as a payment method in the future, which has been one of the main focus areas in the Bitcoin community when it comes to mass adoption.
PayPal should increase its Bitcoin user base
According to Glassnode, Bitcoin currently has over 187 million users, or “hodlets”. While this is impressive, cryptanalyst Willie Wu noticed that he pales in comparison to PayPal’s 487 million users.
Total number of Bitcoin users. Source: Twitter
By adding Bitcoin, PayPal brings the name to a wider audience. Although it is currently only possible to buy, sell and store bitcoins via PayPal, the company announced that it will add cryptocurrency payments and transfers in 2021. When that happens, it could increase Bitcoin’s reputation as a payment and transfer mechanism.
Transactions via PayPal and other centralized platforms can be a way to expand the Bitcoin base to its main user base. Centralized transactions (along with other methods such as side networks and Lightning Network) can be used to reduce congestion on the bitcoin blockchain, so that they can only be used for larger transactions that require more security, transparency or permanent proof of ownership.
Delivery every day
Market Outlook newsletter
By subscribing, you agree
Bitcoin on its way to leading banks
While payment systems and cryptocurrencies seem to find more synergies over time, the same cannot be said for banks, and this conflict is reflected in the price of their shares.
John Ehrlichmann, technology correspondent for BNN Bloomberg, noted that assets such as Bitcoin and Ether and shares in payment companies such as PayPal and Square have performed well this year, but financial stocks have performed poorly since the COVID-19 pandemic.
Bitcoin and Ether indicators since the beginning of the year. Source: data on digital assets.
So far, Bitcoin and Ether prices have risen 80.5% and 217%. Meanwhile, PayPal is up 99% and Square up 186%. On the other hand, banks such as JPMorgan and Bank of America lost 28% and 32% respectively. Citigroup shares fell 46 percent and Wells Fargo shares fell 58 percent.
Bitcoin is still one of the best performing assets in existence, surpassing gold and the S&P 500 by a large margin in 2020.
Return on assets for the current year. Source: Skew.com
As more and more people use Bitcoin as an investment tool, it is possible that consumers will turn their backs on banks and invest in cryptocurrencies.
According to experts, Bitcoin can even benefit from what some call the “robinism effect”, a phenomenon in which retail investors with disposable income buy an asset through free investment platforms to avoid the ritual often associated with banking.
If that happens with BTC, the digital asset could experience the same overinvesting frenzy that happened when Robinhood investors flocked to Tesla earlier this year.