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Bitcoin rose to nearly $ 13,000 for the first time since July 2019 after PayPal announced that it will allow customers to use cryptocurrencies.
The largest digital currency surged as much as 8.5% to $ 12,915 on Wednesday, topping the previous high for the year of $ 12,473 set in August. The gains among the so-called altcoins were even higher, with Litecoin rising more than 13% and Bitcoin Cash rising more than 9%.
PayPal customers can buy, sell and hold cryptocurrencies, including bitcoin, ether, bitcoin cash, and litecoin from digital wallets, as well as use virtual money to buy from the 26 million merchants on its network. PayPal shares rose as much as 5.9% to $ 213.87, the biggest intraday gain since July 30.
Mike Novogratz, who heads Galaxy Investment Partners, on Twitter called it “the biggest crypto news of the year,” adding that banks will embark on a race to maintain digital currencies. “We have crossed the Rubicon,” he said.
The news sparked an exuberant response from cryptocurrency fans who pointed to a series of recent announcements suggesting greater acceptance by old-school financial mainstays.
Two public companies, Square and MicroStrategy, recently said they invested in bitcoin. And Fidelity Investments announced in August that it is launching its first Bitcoin fund, adding its establishment name and star power to the often maligned asset class.
PayPal said it plans to make the features available as a source of financing for purchases at its merchants around the world and plans to expand it to Venmo soon. Merchants will be paid in traditional currencies such as the dollar instead of cryptocurrencies when PayPal customers make purchases.
Dan Schulman, president and CEO of the firm, said in a statement that “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 payment system; and the ability of governments to disburse funds to citizens quickly ”.
Users face some limitations on PayPal. They cannot transfer currencies in and out of accounts and can only have cryptocurrencies that they purchased on PayPal. Cryptocurrencies saved in one account cannot be transferred to other accounts, PayPal said.
PayPal is entering cryptocurrencies just one year after withdrawing from the Libra Association, an effort started by Facebook to develop a digital currency. David Marcus, who leads the Facebook initiative, used to be the president of PayPal.
Bitcoin has been on a hot streak in October, surging more than 17% in October. Still, the cryptocurrency’s use case remains limited. Data from blockchain researcher Chainalysis in 2019 showed that hardly anyone was using bitcoin for anything beyond speculation.
It is partly due to sudden price changes. The coin is up about 70% in 2020, but is still about $ 7,000 from its all-time high of about $ 20,000 set in December 2017. In March, during a coronavirus-induced selloff, it fell 31%.
Bloomberg
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