Paypal purchased 70% of all newly mined Bitcoin last month. This is according to estimates by hedge fund manager Pantera Capital, as revealed in its latest monthly blockchain letter. Together with Square’s Cash App, both companies are purchasing more than 100% of all newly issued virgin bitcoin (BTC), it says.
The letter states that demand for Paypal’s crypto service, which runs on Paxos fiat-to-crypto exchange, Itbit, had increased incredibly. The exchange “was doing a fairly constant amount of trading volume… [but] when Paypal went live, volume started exploding,” it observed, adding “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.”
Paypal announced in late October that its customers – running in excess of 300 million active users – will now be able to buy, hold and sell bitcoin and other digital assets using their Paypal accounts.
The decision also meant users could use their coins to purchase things from the 26 million Paypal-accepting merchants, it said. Early this month, Paypal rolled out the crypto service to U.S. users, with the rest of the world expected to be introduced later.
Bitcoin prices spiked alongside the Paypal news, breaching $12,000 at the time the service was announced, and has maintained the bullish momentum ever since, hitting a three-year high of $18,997 on Nov. 20.
Pantera Capital noted that the Paypal crypto service is “already having a huge impact”. As shown in the graph above, it predicted that if the “growth persists, Paypal alone would be buying more than all of the newly-issued bitcoin within weeks.”
The letter also argues that bitcoin’s current rally is much more “sustainable” than 2017’s because of rising institutional demand from entities such as Paypal, Cash App, and Robinhood, which make buying bitcoin easy.
“Previously the friction to buy bitcoin was pretty onerous: take a selfie with your passport, wait days to a week to get activated, daily limits,” said the letter.