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Paypal’s Announcement Creates a Sudden Demand for BTC


— March 9, 2021

Bitcoin’s reputation as a digital store of value has grown over the past few months as large institutions have jumped on board to accumulate the coin they believe can hedge over inflation just like gold.


When PayPal announced its decision to add Bitcoin support on its platform towards the end of October 2020, no one had anticipated less than three months later, the decision would spark an unprecedented rally within the crypto market. Bitcoin at the time was trading at around $12,000, and a few weeks later, not only did the token break past its all-time high of $20,000 but managed to double it, currently trading at around $40,000 as of press time. Since March last year, BTC has added 8x on its price, and traders are just getting started in 2021.

When Bitcoin rallies, so does the entire market, which managed to cross the $1 trillion mark for the first time. This unprecedented bull run has seen masses jump on various platforms as they try investing in cryptocurrency to ensure they don’t miss out on the incredible opportunity the market is offering. 

What is clear is that this bull run is different from past rallies since it seems there is more acceptance by institutional investors. There is a feeling that finally, crypto is going mainstream, and after the apparent effects of Covid-19 on economies and local currencies, people realize Bitcoin and other cryptocurrencies could serve as better stores of value.

By adding BTC on its platform, PayPal will allow over 26 million sellers who use the platform to receive payments in the digital currency. Interestingly this time around, it’s not retail interest that is driving the price of the coin but institutional investors.

Whales Driving the Price of Bitcoin

A recent report by Kraken shows that “Bitcoin whales,” or addresses with more than 100 Bitcoins, have accumulated an additional 47,500 coins despite the steady price gains that were taking place in December. 

The report states that “not only did the aggregate number of bitcoin in whale addresses hit its highest level all year, 11.46 million bitcoin, but addresses with a balance of more than 100 bitcoin surpassed 16,300—a reading last seen on March 16, 2020.”

The massive accumulation did aid the price of BTC, which rose by 50% in December alone, and after the start of the year, it has gone ballistic, adding another 40%. Over the past year alone, Bitcoin has added over 400% to its value.

Bitcoin. Image via Steven Millstein/Flickr. (CCA-BY-2.0).

Bitcoin’s reputation as a digital store of value has grown over the past few months as large institutions have jumped on board to accumulate the coin they believe can hedge over inflation just like gold. And the growth of acceptance from institutional players has vindicated long time BTC believers who are more than excited with the recent price spike. 

Nathaniel Whittemore, the host of The Breakdown, a Bitcoin analysis podcast, believes several factors have conspired to the skyrocketing of the price of BTC.

“A Rubicon has been crossed with entirely new categories of institutions and corporate buyers; the retail fear-of-missing-out cycle is starting again, and this is all coming into a macro environment featuring significant tailwinds in the form of growing inflation expectations. Compared to other macro hedges, bitcoin is not only cheaper but has much more attractive upside potential. Just because the price is more than it was doesn’t mean it isn’t still undervalued.”

What Next?

This bull run may be different due to the few reasons we have listed above, but if you have been involved with the industry for a while, you know that a correction isn’t very far after a massive rally. This is why some experts warn investors to be careful as they jump on the crypto market due to FOMO. According to David Mercer, the chief executive at LMAX Group, investors should tread carefully since despite the bright future for all assets, “they anticipate some bumps ahead.” Despite the bumps, many expect the price to continue rising over the long term. 

Mercer went on to add that “This year we’ve seen the price move up past the $30,000 area due to the uncertainty gripping markets and while we do anticipate further dips, potentially down to the $15,000 mark, we do not think it is unreasonable to suggest bitcoin could push towards $50,000 in 2021.”

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