PayPal's recent entry into the cryptocurrency market is helping to drive the current bitcoin (BTC) bull run, according to Pantera, a leading cryptocurrency and blockchain investment firm.
The weight of PayPal's choices in the bitcoin market according to Pantera
In a letter to investors released on November 20, venture capital firm Pantera compared the current environment in which bitcoin is on the rise with the market three years ago, which is the last time BTC rose above $ 18.000. .
"Before today, the commitment to buy bitcoin was quite expensive," notes the letter, noting how this difficulty has been overcome thanks to the e-commerce giant PayPal (ticker: PYPL) which has now made it simple for millions of users become potential buyers of bitcoin, ether, bitcoin cash (BCH) and litecoin (LTC).
Currently, PayPal customers in the United States can buy, hold or sell those cryptocurrencies (find out how to buy Bitcoin with PayPal). And the initiative has met with strong interest from customers. Additionally, the company recently raised its weekly cryptocurrency purchase limits from the initial $ 10.000 to $ 20.000.
"BOOM! The results are already evident ”, wrote Dan Pantera, CEO and founder of the homonymous fund, in the November letter. He says PayPal is already covering nearly 70% of the bitcoins in circulation.
In addition to the routine purchase of bitcoins from the Square Cash app, 100% of all newly minted bitcoins are accounted for, according to Pantera. The Bitcoin blockchain issues new BTCs following a fixed and predetermined schedule.
Only 10 new BTCs are mined every 6,25 minutes after the reward "halving" this year, an amount that will continue to decline every four years until all 21 million BTC are in circulation.
The Pantera fund is now worth $ 134 million
Pantera's thesis is based on a simple analysis of the bitcoin offer on the market. The idea is that as the supply of BTC decreases due to a lower mining reward, the demand naturally increases, leading to an increase in the price.
“As other larger financial institutions follow PayPal's lead, the limited supply will become even more unbalanced. The only practical way to balance supply and demand is to raise the price of bitcoin, ”Pantera wrote.
The investment firm raised an additional $ 5 million for its Bitcoin fund, bringing the total to $ 134 million according to a document filed with the United States Securities and Exchange Commission.
Formed in 2013, the Pantera Bitcoin Fund Ltd. was the first US-based bitcoin fund. In a letter to investors from late 2017, Pantera boasted a fund return of 25,004%, mainly due to bitcoin's bull run that year.
Pantera Capital's venture funds raised in August 2013 and August 2014 returned 46,5% and 15,9% respectively from their inception to September 2019. The fund's performance may have improved in recent times thanks to the recent bitcoin bullish run.
