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Story from Markets Bitcoin Breaks $15K as Investor Numbers Peak

Bitcoin’s rally is still going as investors continue to accumulate the cryptocurrency, ignoring overbought signals on technical indicators.

  • Bitcoin (BTC, +8.80%) rose to $15,017.05 at 10:50 a.m. ET (15:50 UTC) on Thursday, its highest level since January 2018.
  • The price gains happened as global equities rally. European stock indexes are up around 1% on the day and U.S. stock indexes such as the S&P 500 are up over 2%.
  • The cryptocurrency is now up 7.8% over the past 24 hours and over 108% on a year-to-date basis, according to CoinDesk’s Bitcoin Price Index.
  • Amid the price rally, the number of “accumulation addresses” has risen to a record high of 519,228, according to data source Glassnode.
  • The metric has risen by 3% in the past four weeks alongside bitcoin’s rally from $10,500 to $15,000. “It shows retail flow … investors accumulating amid the price rally,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant told CoinDesk in a Telegram chat.
  • Also, accumulation addresses are up over 9% in 2020, meaning investors have been accumulating coins throughout the year, possibly creating upward pressure on prices.
  • Notably, the number of bitcoins locked in accumulation addresses has gone up 20% to 2,818,447 BTC this year.
  • Accumulation addresses are those that have at least two incoming “non-dust” transfers (representing minuscule amounts of bitcoin) and have never spent funds. The metric does not include addresses belonging to miners and exchanges and excludes addresses active more than seven years ago to adjust for lost coins.
glassnode-studio_bitcoin-number-of-accumulation-addresses-1
Bitcoin accumulation addresses and price
Source: Glassnode
  • In a sign of confidence in the cryptocurrency’s long-term prospects, investors accumulated coins during the March crash and also during the price drop in September. On both occasions, the price dip was short-lived.
  • The recent rise in both accumulation addresses and prices indicates the market participants are not worried about a chart-driven sell-off and foresee a continued rise in prices.
  • Bitcoin’s 14-day relative strength index (RSI) has been indicating overbought conditions since Oct. 20, when bitcoin was trading near $11,700. So far, the technical pullback has remained elusive.

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Adoption

PayPal’s crypto trading goes live in the US!

Customers will be able to trade up to $20,000 a week, rather than the originally announced $10,000.

On Thursday, PayPal’s crypto trading and payments went live for all eligible customers in the United States.

Per its updated announcement, PayPal ended its waitlist for customers looking to use cryptocurrency in the U.S. Trading features a limit of $20,000 per week, which is double the originally announced $10,000.

PayPal ultimately plans to make crypto payments available at 26 million merchants globally.

A representative said that PayPal will notify U.S. customers about the general availability of crypto services in the coming days.

Dan Schulman, CEO of PayPal, noted that the shift to supporting crypto was driven by what he sees as an “inevitable” drift toward virtual currencies.

“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.”

Much-anticipated global services are expected to launch at the beginning of 2021, alongside crypto payments on Venmo. PayPal initially announced its plans to integrate crypto three weeks ago. The announcement led to a boost in BTC price.

As part of its crypto services, PayPal received the first conditional Bitlicense from the New York Department of Financial Services, one of the most hawkish sub-national financial regulators in the U.S. Many noted that the terms of PayPal’s crypto services would entail that coins bought on the platform would not be able to leave, likely as part of its compromise with regulators in bringing crypto services to such a wide user base.

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Bitcoin

How To Buy Bitcoin (BTC) With Your Paypal Account Step By Step Guide 2020

There are 26 million merchants that offer PayPal around the world. For those merchants, customers paying in crypto won’t have any impact. Everything will be converted to fiat currency when a transaction is settled.

As part of today’s (October 21st, 2020) move, PayPal has been granted a conditional BitLicense by the New York State Department of Financial Service. It should be able to launch its crypto service in partnership with Paxos in New York.

PayPal’s crypto service is rolling out progressively. You can head over to PayPal’s website and join the waitlist. Everybody should be able to access crypto-related features within the next month or so. The company has already updated its fees with more details about cryptocurrency exchange fees.

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Adoption

PayPal Allows Bitcoin And Crypto Spending

PayPal has entered the cryptocurrency market, announcing that its customers will be able to buy and sell Bitcoin and other virtual currencies using their PayPal accounts.

Those virtual coins could then be used to buy things from the 26 million sellers which accept PayPal, it said.

PayPal plans to roll out buying options in the US over the next few weeks, with the full rollout due early next year.

Bitcoin prices rose alongside the news, breaking the $12,000 (£9,170) mark.

The other cryptocurrencies to be added first will be Ethereum, Litecoin, and Bitcoin Cash (a spin-off from Bitcoin).

All could be stored “directly within the PayPal digital wallet”, the company said.

‘Penny stocks’

Cryptocurrencies have remained a niche payment method, partly down to the rapid change in prices they can experience compared with traditional state-backed currencies. That has made them popular among some types of investors.

PayPal said it was aiming “to increase consumer understanding and adoption of cryptocurrency”.

“As part of this offering, PayPal will provide account holders with educational content to help them understand the cryptocurrency ecosystem,” it said.

But David Gerard, author of Attack of the 50 Foot Blockchain and the forthcoming Libra Shrugged: How Facebook Tried to Take Over the Money, said PayPal was describing “a crypto day-trading market”.

“I’m at a loss as to who the market is for PayPal as a crypto-exchange,” he said.

He likened it to playing the stock market, but with Bitcoin – whose volatile and less well-regulated nature was like “gambling on penny stocks”.

“Have a flutter, drop $10 on it, you’ll learn things you wouldn’t learn any other way – but you are gambling,” he warned.

He said there were “a lot of big players who manipulate the price”, and ordinary people risked losing their money.

“I don’t expect much of a market for this beyond existing crypto holders… I’m baffled that PayPal would offer this, and it’s not clear what they’re trying to do here,” he said.

“There must be someone at PayPal who is very interested in cryptocurrencies,” he added.

Paying with crypto

Other payment firms, such as Square’s Cash app and Revolut, have already offered cryptocurrencies for sale. But PayPal has one of the largest merchant networks in the world.

When it comes to using the virtual coins, PayPal will convert the cryptocurrency into the relevant national currency, so the company being paid will never receive the virtual coins – just the correct amount of pounds or dollars.

PayPal said the system meant there would be “certainty of value and no incremental fees”.

But using Bitcoin to pay at ordinary merchants is not due to launch until “early 2021”.

Cryptocurrencies’ volatile prices – along with their historical use as a less traceable payment method for illegal purposes – have led to numerous calls for them to be regulated.

PayPal has been granted permission for its operation from the New York State Department of Financial Services, in the form of a conditional “Bitlicence” – the first such licence granted.

To begin with, the service will work with an existing cryptocurrency provider in the US, the Paxos Trust Company.

But it is not PayPal’s first venture into the area.

The firm was once a partner in Facebook’s digital currency Libra, but became the first to pull out of the alliance, just a few months after it was announced.

The scheme was controversial, attracting attention from financial regulators in several countries.

Earlier this year, Facebook was reported to be “rethinking” the idea amid the resistance.

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