Paypal-FOMO as a catalyst: Bitcoin at $20K this week?
Bitcoin’s bullish fundamentals continue to overshadow the rather bearish technical data. Last week the crypto currency was on a downward trend, although it was traded well above its current levels.
At $18,980, BTC reached another annual high, testing a three-year high. Meanwhile, the Momentum Oscillator, the relative strength indicator, continued to warn of „overbought“ signals.
The Bitcoin RSI has remained overbought by Bitcoin Evolution for weeks and expects massive downward corrections. Source: BTCUSD on TradingView.com
The incredible upward trend took place without any concrete hype. A mere glance at the search term „Bitcoin“ in Google Trends does not show a growing number of search queries.
In comparison, the earlier Bitcoin cycles had caused Google searches to explode on their way to their all-time highs in 2013 and 2017.
That explains in some ways: The current price rally is institutional. A California-based investment firm provides evidence of how the world’s largest payment company is driving the rally.
Paypal is the new Bitcoin whale
In a recently published report Pantera Capital comments that PayPal is buying most of the newly mined Bitcoins – about 70 percent of all Bitcoins. Last month, the Fintech giant launched a crypto store on its existing US platform, enabling its 300 million users to store, sell, buy and spend Bitcoin and other crypto currencies.
„The provider of PayPal’s crypto infrastructure is Paxos,“ writes Pantera, „Before PayPal integrated crypto, itBit, the exchange operated by Paxos, handled a fairly constant trading volume. When PayPal went live, the volume began to explode. The increase in itBit volume means that within four weeks of going live, PayPal is already buying almost 70% of the new Bitcoins offering“.
Together, PayPal and Square’s competitor CashApp now buy more than 100 per cent of Square’s newly won Bitcoins. This leaves the crypto-currency in a supply deficit – against the booming demand from retail investors and institutions.
So it seems that the development of PayPal alone is enough to drive the Bitcoin price up by $2,000 this week.
Bitcoin at $20K
The small downward correction this weekend has shown that Bitcoin is able to hold its own against two extremely assertive sales attempts. For example, the BTC/USD exchange rate fell to as low as $17,610 on Sunday, only to be pushed back in the other direction later by solid buying sentiment.
The pair rallied and closed trading at $18,437. It traded near the same level on Monday, targeting $18,500.
Bitcoin risks a correction after posting gains for seven consecutive weeks. Source: BTCUSD on TradingView.com
The PayPal FOMO could allow Bitcoin to hold $18,500 as support for the next uptrend towards $20,000 – the record high with great emotional impact among traders.