In mid-July, fintech firm Stripe made an unsolicited $53 billion bid for PayPal (PYPL +0.27%). That’s good news for the crypto market overall, and potentially even better news for Bitcoin (BTC -1.55%).
For much of the year, Bitcoin has been in a dismal tailspin, down 25% year to date. But after the $53 billion Stripe bid, Bitcoin perked up. It’s now up more than 5% since news of the deal broke. And some analysts now think Bitcoin could be on the way to reaching $80,000 by the end of August.
Crypto goes mainstream
The big theme of the Stripe-PayPal deal is that digital currencies are suddenly going mainstream. The future of payments will now almost certainly include a mix of traditional cryptocurrencies such as Bitcoin, as well as dollar-pegged stablecoins. That’s because Stripe and PayPal, in addition to being fintech giants, are both heavily involved in the stablecoin business.
Image source: Getty Images.
So Bitcoin’s recent market gains can largely be chalked up to the fact that PayPal, with its 400 million active customer accounts, could be a fantastic way to bring Bitcoin to the masses. PayPal already offers customers the option to buy and sell crypto directly from their customer accounts, and this could be yet another way to encourage retail businesses and small business owners to adopt Bitcoin.
Will Bitcoin finally be used for payments?
Bitcoin, as the first-ever digital currency, was supposed to eventually become a mainstream means of payment. Over time, the thinking goes, Bitcoin would become a new way to pay for everything from everyday consumer goods to big-ticket luxury items.
Today’s Change
(-1.55%) $-1,012.33
Current Price
$64,104.00
Key Data Points
Market Cap
Day’s Range
$63713.00 – $65700.00
52wk Range
$57945.16 – $126079.89
Volume
25.4B
Billionaire Silicon Valley venture capitalist Tim Draper, for example, has been beating the drum for Bitcoin to become a mainstream currency for years. According to him, Bitcoin has the potential to rally to $250,000 or higher, provided consumers start using Bitcoin for everyday purchases. Draper also speculates that at some point, retailers might adopt a “Bitcoin only” policy, which could further accelerate this paradigm shift.
Thus far, that hasn’t happened, of course, and Bitcoin has primarily been used as a store of value. In other words, Bitcoin is treated as a long-term appreciating asset rather than a medium of exchange.
So that’s why the Stripe-PayPal deal looms as potentially so significant. Once consumers start using stablecoins to make purchases, they’ll almost certainly embrace paying for them with Bitcoin as well.
But what about stablecoins?
Admittedly, stablecoins have usurped some of the role that Bitcoin was supposed to play in payments. Even Cathie Wood of Ark Invest, a longtime supporter of Bitcoin, has acknowledged as much.
In November, Cathie Wood downgraded her price target for Bitcoin, primarily based on the growing ascendancy of stablecoins. Even so, she still expects Bitcoin to reach $1.2 million by 2030.
That’s why it’s easy to see why crypto investors are so bullish about the Stripe-PayPal deal. Yes, the deal doesn’t impact Bitcoin directly. But the indirect impact — encouraging everyday consumers to adopt Bitcoin as a digital currency — could be even bigger.