The leading online payments system PayPal has finally confirmed the rumors by announcing that it will enable users to buy, hold, and sell cryptocurrencies. PayPal unexpectedly shared the news on October 21, only a month after appearing as a payment method on a European crypto exchange.
According to the announcement, the company acknowledges that a future shift towards digital assets is inevitable. Therefore, PayPal seeks to become a first-mover in the traditional finance industry by being the first widely-used payment processor to offer crypto payments. Users from the U.S. will be able to use the new service in the coming weeks. However, the rest of the world will have to wait as PayPal plans to offer cryptocurrencies around the first half of 2021.
Regulation-wise, the company already made the first steps by receiving a conditional Bitlicense from the New York State Department of Financial Services (NYDFS). Additionally, the company has also partnered with Paxos, a regulated peer-to-peer cryptocurrency exchange, to provide the new crypto service to U.S. citizens.
Naturally, the news had a great positive impact on the entire cryptocurrency market, specifically on Bitcoin. On October 21, the leading digital asset printed a $1,200 daily candle, one of the largest positive moves in recent months. Moreover, Bitcoin steadily resumed its growth and managed to reach $14,000 this week, a high that was last seen in June 2019.
How will PayPal’s announcement affect Bitcoin in the long run?
Apart from the obvious, there still remains the question of how PayPal’s crypto integration may truly affect the market? After all, there is much more happening behind the scenes other than short-term price action.
PayPal’s recent move may serve as a final confirmation that institutional companies are not shy anymore and that they have started to openly share their interest. As a reminder, a number of companies have invested more than millions of dollars in Bitcoin. The case of Michael Saylor and MicroStrategy may be the most famous one. In September, Saylor’s company purchased 38,250 of Bitcoin at an aggregated price of $425 million. Only a few weeks later, Twitter CEO Jack Dorsey made a similar investment.
Can we expect even a higher number of firms and individuals to start investing in Bitcoin? Are the recent investments financially calculated or are they a simple marketing trick? After all, Bitcoin was valued at incredibly low prices in the last couple of years and no giant company has made an investment at that time. It would make more sense that they would seek to preserve capital by employing risk management techniques, one of the most important aspects of both trading and investing.
Bitcoin is at a yearly resistance that stood strong for three times in the past few years and bulls have never really managed to flip it into support. Therefore, it is natural to ask why all these companies are ‘buying the top.’ Did Bitcoin really become that much of a bullish asset in recent months or is there something else? After all, all financial markets took a beating in March this year and the situation does not seem to be any better now that several countries plan to reintroduce lockdowns due to a second wave of the coronavirus.
Whatever may be the case one thing is still certain, institutional investors have finally become interested in Bitcoin as a speculative or even as a store of value asset. News like PayPal will only further improve that narrative as it allows millions of people all over the globe to purchase cryptocurrencies. Widespread adoption and institutional interest go hand in hand, and there is no reason to think that the market is not at least short-term bullish.