PayPal has triggered a Bitcoin supply crunch after allowing its users to buy BTC for the first time, according to the CEO of crypto investment firm Pantera Capital.
In a new blog post, Dan Morehead says PayPal customers are already buying 70% of the new supply of BTC entering the market.
“PayPal’s crypto infrastructure provider is Paxos. Prior to PayPal’s integration of crypto, itBit, the Paxos-run exchange, was doing a fairly constant amount of trading volume – the white line in the chart below.
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 Bitcoin.”
When you combine those figures with the fact that people are already buying BTC in large numbers on Square’s Cash App, Morehead says 100% of all newly-minted Bitcoin is being bought on the open market.
“Where would Cash App get their coins? That’s where the finite-supply, inelasticity part comes in: at a higher price. That is THE story in Bitcoin right now.”
Morehead points to the ease of buying crypto on PayPal, Cash App, Robinhood and other platforms as a key driver for the industry this year, giving people a way to invest without long wait times and the need to take selfies to prove their identity.
PayPal added support for Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) for all of its US customers on November 12th.