Even in the volatile world of cryptocurrencies, some trends tend to ring true, and the bearish Q4 of 2018 and 2019 appears to be carrying some negative sentiment into the final months of 2020 – judging by early figures.
With the value of Bitcoin slowly beginning to fall, traders are gearing up for a slow end to the year, but with mounting speculation that PayPal is about to burst into the cryptocurrency industry, 2020 may yet have some major twists and turns.
At the start of a summer of activity that saw PayPal begin to recruit experts in crypto and blockchain alike, some crypto outlets were quick to declare that Bitcoin could be on its way to the moon.
On the topic of PayPal forging a Bitcoin moonshot, Time For Crypto highlighted that the arrival of the payments giant will be a great way of establishing a degree of integrity into the crypto marketplace. However, there’s plenty more to be excited about should PayPal soon take the plunge and accommodate cryptocurrencies. Let’s take a deeper look into whether PayPal really can revitalize the world of crypto amidst a slow quarter for the market:
Preparing For Accommodation
As the summer of 2020 rumbled on, PayPal attracted more attention in the media for its steps towards accommodating cryptocurrencies.
Notably, Sandi Bragar, Aspirant managing director claimed that PayPal is attempting to encourage sellers to adopt cryptocurrencies. Coming off the back of news that the payments organization is looking to take on talent in the field of crypto and blockchain, many investors accepted that this could mean that PayPal’s finally set to announce cryptocurrency trading services.
“We are pleased that PayPal is working with sellers to drive cryptocurrency acceptance, and we think this will be really important as cryptocurrencies become more common in the coming years,” Bragar said.
So is the ramping up of interest on the part of PayPal set to revolutionize the cryptocurrency market? Or are investors set for a false dawn? The relationship between the payments organization and the world’s most famous cryptocurrency is a long one but there’s very little in the way of a concrete connection between the two entities despite almost a decade long history.
The Path Towards Adoption
Links between PayPal and the world of crypto are nothing new, and the payments company has been dabbling in the idea of accommodating the likes of Bitcoin since 2013. Then PayPal president, David Marcus stated that “it’s just a question of whether Bitcoin will make its way to PayPal’s funding instrument or not.”
In the months that followed Marcus’ words, John Donahoe, eBay CEO echoed the sentiment that payment platforms will soon need to integrate Bitcoin as a means of keeping up with the latest developments in the world of finance. In the years that followed Bitcoin did become better integrated with PayPal, and subsequently many online exchanges began to offer Bitcoin to PayPal conversions for customers.
However, the world has had to wait significantly longer for the payments behemoths to begin accommodating cryptocurrencies within its own platform. But 2020 has been rife with speculation that PayPal is preparing to list crypto assets in a move that could finally propel the world of crypto into the mainstream.
Considering that PayPal has over 300 million accounts worldwide, the number of people who will be exposed to crypto will dwarf the total number of cryptocurrency wallet holders across the world – amounting to almost 50 million in total.
Implications for Bitcoin
The reason that cryptocurrency investors are hell-bent on welcoming the arrival of PayPal is because of the implications that over 300 million active users will have on the market.
Alex Mashinsky, crypto lending platform Celsius Network’s founder and CEO told Cointelegraph that many cryptocurrencies will instantly rise should PayPal enter the market, “as the scarcity of the coins will play a big part when adoption comes.”
Because of the market capitalization of coins like Bitcoin and Ethereum, their exposure to massive audiences of investors has the power to send their prices hurtling upwards as long as enough of PayPal’s existing users are willing to invest.
Naturally, the influence of PayPal could be more profound than simply placing coins under the noses of potential adoptees. As something of a household name globally, PayPal can play an invaluable role in building trust between potential investors and the cryptocurrency market – essentially propelling it into the mainstream.
Where the likes of Bitcoin has been met with fear and confusion by people who saw the world of decentralized assets as a murky and untrustworthy place, now recognisable brands can help to alleviate the fears that are holding back those who lack experience in the market place.
However, writing for Forbes, crypto and blockchain writer, Christopher Brookins, has played down the potential effect that PayPal could have on Bitcoin. Brookins noted that despite the vast volume of PayPal accounts active, the total amount of receivable funds and values in customer accounts stand at just under $23 billion.
“Assuming that account balances remain static and those idle funds are allocated to bitcoin within a band of 1% to 5%, that new demand would generate between $230 million and $1.15 billion boost to market cap,” Brookins elaborates. “That figure alone is impressive, but considering bitcoin’s market cap is already $168 billion, the $1.15 billion, maximum, potential increase would result in only ~ $9,300 per coin.”
Whether it’s heading to the moon or $9,300 as a direct result of PayPal’s influence, the wider ramifications of having a major player in the world of finance embracing cryptocurrencies could help to bridge the gap between crypto investors and the rest of the world. Pulling crypto assets into the mainstream can carry benefits across the board.