Pantera Capital: PayPal Impact “Already Apparent”

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  • Pantera Capital says that the impact of PayPal’s new cryptocurrency platform is “already apparent”
  • The investment firm says that PayPal is scooping up 70% of all new Bitcoin through Paxos
  • When all new Bitcoin supply is spoken for, institutions will have to pay market price

Pantera Capital has said that the impact of PayPal’s new cryptocurrency platform is “already apparent” as the payments giant has scooped up nearly 70% of all new Bitcoin since announcing the platform three weeks ago. This has in turn put pressure on other institutional buyers of Bitcoin such as Square’s Cash App, who until now were the biggest buyer of newly minted Bitcoin, which has helped push the price further and usher in what Pantera Cappital calls a “more sustainable” rally than we saw in 2017.

Paxos Buying Up Bitcoin Through itBit

Pantera published the theory in their monthly newsletter under the headline ‘Bitcoin Shortage’, which illustrated that Paxos, the cryptocurrency company backing the PayPal offer, has seen a sharp rise in their Bitcoin purchases through their exchange itBit:

bitcoin itbit

As Pantera explained, prior to the PayPal launch itBit was “doing a fairly constant amount of trading volume” as indicated by the horizontal white line on the chart. However, since the PayPal launch the volume has increased rapidly from an average of $5 million per day to $15 million last week.

Pantera Capital Says Buying Pressure Will Push Price Higher

Pantera adds that the sudden influx of Bitcoin into itBit equates to PayPal buying up nearly 70% of the new Bitcoin supply which, when taken with the amount of Bitcoin also being snapped up by Square’s Cash App, comes to “more than 100% of all newly-issued bitcoins” being absorbed by these two entities alone.

Pantera adds that if the current buying rate persists “PayPal alone would be buying more than all of the newly-issued bitcoin within weeks.” Where, they ask, would this leave Cash App? The simple answer is: at a higher price. Square, like other financial institutions that enter the game, would be forced to buy Bitcoin at market or near-market price, further pushing it up.

This, say Pantera Capital, is where Bitcoin’s “finite-supply, inelasticity” plays an important role and leads to more sustainable, long term buying pressure compared to the retail based bun fight in 2017.