Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.

Editor's Note: This article comes from

Chain reference (ID: lianneican)

Chain reference (ID: lianneican)

By now, most of us have heard that PayPal has started buying and selling cryptocurrencies in the US in recent weeks and will roll it out to select international markets in the first half of 2021. Initially, it included four cryptocurrencies - bitcoin (BTC), bitcoin cash (BCH), ethereum (ETH) and litecoin (LTC).

Source: altFINS

It is undeniable that this is a major leap forward for cryptocurrencies. More than 361 million active PayPal users will be able to use their cryptocurrency balances to pay for goods and services at 26 million merchants around the world.

For investors, this means that the four cryptocurrencies will see greater demand over the next six to 12 months as PayPal users, especially millennials, start buying the tokens. We suspect that PayPal and Square (Cash App), other digital payment card competitors, are not far behind in their own cryptocurrency initiatives.

Since PayPal's statement on October 21, the price of bitcoin has risen 50 percent from $12,000 to $18,000. Of course, there are other catalysts (institutional and corporate allocations to Bitcoin). Judging from various data, we believe that PayPal is the main reason for Bitcoin's recent rise, and this is just the beginning.

The general public is eager to get involved with digital assets, but due to their complexity and security concerns, digital assets remain out of reach for most people. PayPal removes all the complexity and uncertainty.

Source: Nomics

How much BTC can PayPal's user base buy? As of Nov. 2, only 10 percent of PayPal users in the U.S. had access to the encryption service, and by Nov. 12, it had rolled out to all U.S. users. Citing huge demand, PayPal raised the maximum amount users can buy from $10,000 a week to $20,000 a week.

Source: altFINS; Square

Buying has clearly begun. PayPal volume is being exchanged through itBit (owned by Paxos, based in the US, licensed). Notice how their transaction volume has increased in recent weeks, from $5.6 million per day to $15.7 million, and even tripled to $31 million on November 17th.

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To gauge future BTC demand from PayPal's user base, we can use Square (the cash app) to do some quick calculations. Square’s support for Bitcoin purchases began in 2018, the “crypto winter” following the ICO bubble of late 2017/early 2018. Activity picked up in 2019 and accelerated in 2020.

Square has about 30 million users on the Cash App, which supports bitcoin purchases. In the third quarter (ended Sept. 30), Cash App users bought $1.63 billion worth of bitcoin, an average of $54 per user, an 87% increase from the previous quarter.

Source: altFINS; Square; PayPal

If we assume that PayPal's user base buys the same amount at $54 per user, this means that 361 million users could buy $19.7 billion worth of Bitcoin. Does it make sense? You sure are. Bitcoin's current market cap is $326.8 billion. PayPal users may generate demand for 6% of Bitcoin's market cap. That changes the price, we've seen that.