On Wednesday (October 21), the Bitcoin price surged past $13,000 for the first time in over 15 months thanks mostly to an announcement from PayPal that it is launching support for cryptocurrencies.
In the past one-month period, Bitcoin has steadily moved higher from the low of $10,365 it reached on September 22. Probably the main catalyst for Bitcoin’s gain during these past few weeks has been optimism surrounding a COVID-19 fiscal stimulus deal in Washington, which is something that should increase interest in Bitcoin as an inflation hedge.
Although many had hoped — following encouraging comments from President Donald Trump, his representative Treasury Secretary Steven Mnuchin, and House Speaker Nancy Pelosi — that by Tuesday evening (Eastern Time), there would be agreement on a comprehensive covid-19 relief package, Pelosi’s Tuesday night deadline (that she had during the past weekend) passed with the Democrats and the White House still arguing over some contentious issues (such as the amount of state and local aid that should be included in the relief package) and Pelosi deciding to extend her deadline for these talks to this coming weekend.
Around 11:30 (UTC) on Wednesday, Bitcoin was trading as low as $12,191, when suddenly came a huge announcement from PayPal: that it is going to allow its customers to “buy, hold and sell cryptocurrency directly from their PayPal account.”
Initially, the supported cryptoassets will be Bitcoin, Ethereum, Bitcoin Cash, and Litecoin — users will be able to buy, sell, and hold these cryptocurrencies “directly within the PayPal digital wallet” — and the only supported jurisdiction will be the U.S. (this will happen “in the coming weeks”). PayPal is planning to “expand the features to Venmo and select international markets in the first half of 2021.”
This news helped the Bitcoin price to surge from $12,191 — at 11:30 (UTC) — to the intraday high of $13,219, which was reached around 23:00 (UTC) on Wednesday, which means that the Bitcoin price had surged just over 9% vs USD in a little over 12 hours. Currently, Bitcoin is trading at $12,853, up 5.71% in the past 24-hour period.
Other cryptoassets also benefitted from this news since PayPal’s entry into the crypto space should help to increase mainstream awareness/adoption of cryptoassets in general (and not just help Bitcoin). Among the top 20 cryptoassets by market cap, the biggest percentage gainer was Litecoin (one of the four cryptocurrencies supported by PayPal), which is currently trading at $55.13, up 12.98% in the past 24-hour period.
What is interesting about Bitcoin reaching a high of $13,291 yesterday is that the last time Bitcoin was above the $13,000 level was 10 July 2019, when Bitcoin reached a high of $13,183, as you can see from the three-year BTC-USD price chart below:
As for what to expect from Bitcoin in the next few days, investors/traders are going to have to continue to wait for news from Washington regarding the state of the stimulus talks.
Last night, Drew Hammill (Pelosi’s Deputy Chief of Staff) sent out an update via Twitter (around 20:07 UTC or 16:07 EDT) that keeps hopes alive for a stimulus deal by this weekend:
It is clear that the Trump administration wants to reach an agreement with Pelosi by this weekend — since that would help Trump’s chances of getting re-elected — and that Pelosi , although less motivated than Trump to make a deal, is realizing that if she appears to be too stubborn/uncompromising, that could hurt the Democrats in next month’s presidential election. The main problem now seems to be getting Senate Republicans — who are led by Senate Majority Leader Mitch McConnell — to go along with any Pelosi-led agreement that might reached in the next few days.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.