The Bitcoin world is reeling from a recent PayPal announcement stating that customers will now be able to hold bitcoin and other virtual coins in its online wallets. With this functionality, PayPal customers will now be able to shop using cryptocurrencies throughout the 26 million merchants on its network from as early as the first half of 2021.
The announcement details PayPal’s intentions to encourage the global use of virtual coins and prepare its networks for new digital currencies that may be developed by central banks. When this moves forward, PayPal will be one of the largest U.S. companies to enable consumers’ access to cryptocurrencies. A green light from the payments giant of this level will enable bitcoin and competing cryptocurrencies to gain mainstream adoption as viable payment methods. While the announcement saw PayPal’s shares rise 4%, set for their best day in a month, the result on Bitcoin was far more dramatic.
For the first time since June 2019, Bitcoin surpassed $13,000 as a direct result of optimism following the PayPal announcement. On the same day of the announcement, Bitcoin grew from $12,300 to $13,200 at its peak for the day. While market sentiment has seen an uptick, analysts erring on the side of caution are not dismissing the potential of a pullback.
However, pullback or not, Joseph Edwards of London-based cryptocurrency brokerage, Enigma Securities shares “the price impact will be positive overall” due to the size of PayPal and the significance of its vote of confidence for altcoins. He further shared that “there’s no comparison with regards to the potential exposure between the upside of PayPal offering this, and the upside of any similar previous offering.”
While analysts are speculating a myriad of ways bitcoin could travel from this announcement, some agree it’s too soon to tell what the overall trend will be. Most argue a slight pullback as bitcoin nears $14,000 (a known resistance level) with analysts expecting the range to form between $12,500 to $13,500 stably for upcoming months until another breakout.
The two key figures as resistance levels will be the $12,500 mark and $14,000 which have both proven to be heavy multi-year resistance ranges. The possibility also exists that a tight range under a key resistance level that has held bitcoin down for nearly four years may put the cryptocurrency in a good place to meet a new record-high which is only within arm’s length – especially when the next breakout occurs.
Regardless of the speculation, cryptocurrencies have struggled to be widely adopted as a mainstream payment method, and PayPal believes its new system will address these issues. The company will ensure that it facilitates ease of payment settling using the U.S. dollar, thus managing the risk of price fluctuations which has been a previous point of contention for regulators.