Oct 27, 2020
Mass Adoption?
Market Recap
Digital Currencies posted a broad rally this week with Bitcoin reaching its highest level in 2020 at just over $13,000, Bitcoin balances on exchanges has gradually declined while price soars [Figure 1]. Among other top coins, Litecoin has traded up the most gaining 22.8% for the week while XRP underperformed by only gaining 3.71% last traded at 0.25. Digital currencies continue to attract investment capital from traditional fund managers and companies with Paul Tudor Jones stating on CNBC last week that the bitcoin rally was still “in early innings”.
This week rapid rally was due to the biggest news of the week from PayPal. The company announced that it will add the ability to buy cryptocurrencies on its site in the coming weeks. Their blog mentions Bitcoin, Bitcoin Cash, Ethereum and Litecoin. Initially, only US residents will have access to such an opportunity, and this initiative will spread to the whole world in 2021. PayPal users will be able to pay for goods and services in cryptocurrency in tens of millions of stores around the world. At the same time, shops do not need to create cryptocurrency wallets, since when making a purchase, the cryptocurrency will be converted to fiat. For this, PayPal will use the services of Paxos. It also became known that the payment giant is negotiating the purchase of various cryptocurrency companies and he first target will be the custodian service BitGo.
What is Happening?
Following three consecutive weekly advances, US stocks declined modestly last week. The news flow was dominated by headlines around the negotiations for another round of fiscal relief from Washington before the election, which is fast approaching. The 10-year Treasury yield rose to the highest level in four months amid expectations that a potential Biden win would lead to a larger relief package to support the economy. Aside from the speculation about potential election outcomes and policies, economic data for the week was encouraging to the long-term outlook, showing an improvement in jobless claims and continued strength in the housing market. In the UK, Wales opted for a full lockdown lasting 17 days. In England, the highest, tier-3 lockdown regime spread was extended to cover South Yorkshire and Manchester and could be implemented in other areas soon. More English regions and cities were also placed under a tier-2 lockdown, while some large field hospitals began to reopen. Amending an earlier bailout plan, the UK government increased support for jobs and workers hit by restrictions in tier-2 areas after growing clamor from firms in the hospitality sector. Chinese stocks retreated for the week, with the large-cap CSI 300 Index and benchmark Shanghai Composite Index shedding 1.5% and 1.8%, respectively. Chinese e-commerce giant Alibaba began promotions for “Singles Day,” the world’s largest consumer shopping event it holds on November 11 each year. This year’s event will be extended by three days to meet an expected coronavirus-driven surge in demand. Alibaba said it expects about 800 million consumers to participate in this year’s Singles Day, which despite drawing huge publicity is not considered economically significant given that it cannibalizes consumer spending from adjacent time periods.
Conclusion
Over the last month, Bitcoin seems to have been getting more attention from the institutional investing world more generally. Last week, investment firm Stone Ridge announced a $115 million investment into Bitcoin; earlier this month, Square announced a $50 million BTC investment and Business intelligence firm Microstrategy announced a $425 million Bitcoin investment at the end of September. Bitcoin adoption is coming to a trend with the additional astounding Paypal announcements. Just like Wall Street veteran, Paul Tudor Jones who is also in the game said, “Even his own investment in BTC remains in the single digits, investing in Bitcoin is like investing with Steve Jobs and Apple or investing in Google early.”.
Good Luck!
