Bitcoin shortage – Does PayPal really buy all new mined BTCs?

Will Bitcoin keep pace? – The cryptosphere is in full euphoria as Bitcoin (BTC) prices seem to be heading towards their former all-time high. As a result, the Pantera Capital fund believes that PayPal and Square alone are buying all the new Bitcoin currently being mined. What is the real situation?

Is PayPal devouring all the new BTCs?

The investment fund Pantera Capital specialises in cryptosystems and companies related to blockchain technology. It has just published a report on the current situation of the cryptos market.

Indeed, since the payment giant PayPal announced that it would make bitcoins available to its American users, the demand for BTCs has exploded.

To affirm this, Pantera Capital bases itself on the strong increase in exchange volumes of the itBit platform. Managed by PayPal’s partner, the company Paxos, the itBit crypto stock exchange has indeed seen its exchange volumes more than triple after the announcement of the digital payment giant.

According to Pantera Capital’s estimates, PayPal would thus buy nearly 70% of all the new bitcoins issued. Combining this with BTC’s purchases of Square’s Cash App service, the investment fund believes that :

„PayPal and Cash App are already buying more than 100% of all newly issued Bitcoins (…). When other larger financial institutions follow PayPal’s example, the scarcity of supply will become even more unbalanced. The only way to balance supply and demand is through [BTC] price increases. »

Things may not be that simple

Even if this analysis by Pantera Capital gives some balm to the heart of the cryptosphere, the importance of the itBit platform must be put into perspective.

Indeed, as Larry Cermak, Director of Research at The Block, points out, the 30-day volumes of the itBit crypto-market represent only 2.6% of the exchange volume of a platform such as Coinbase, for example.

„To put things into perspective, on yesterday alone, Coinbase achieved almost 3 times the [exchange] volume that itBit has done in the last 30 days. If this is really a good way of estimating PayPal’s [BTC purchases], then the volumes are almost insignificant so far. »

Obviously, part of the purchases of bitcoins by Paxos for PayPal could also be done OTC (over-the-counter), which would not lead to an increase in volumes in the order books. However, between PayPal, Square and funds such as Grayscale – whose institutional investors are fond of cryptos – the tension on the demand for Bitcoins must be very real. Soon to be out of stock?

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