Pantera Capital CEO: Bitcoin rose on private-investor demand

The emergence of new ways for retail investors to buy Bitcoin has led to a surge in demand, says Dan Morehead. According to Pantera Capital’s chief, only PayPal users buy more coins than miners mine.

When @PayPal went live, volume started exploding. The increase in itBit volume implies that within two months of going live, PayPal is already buying more than 100% of the new supply of bitcoins.#bitcoinshortage

Read: https://t.co/fb4d1xNxqx pic.twitter.com/yxQNAhsWJZ

— Dan Morehead (@dan_pantera) December 27, 2020

The head of Pantera Capital cited a recent report by the company, in which Bitcoin’s price prospects are viewed through the prism of supply and demand.

“Over the last seven months we have had two huge shifts — in demand and supply — both toward higher prices.”

The rise in demand in the report is explained by the involvement of payment companies such as PayPal and Square in the crypto industry. The availability of buying cryptocurrencies lifts the demand curve. At the same time, Bitcoin issuance halved after the halving in May.

Data: Bitcoin Demand = 3x Supply / Pantera Capital.

A supply reduction (S -> S halving) while demand increases (D -> D PayPal) naturally leads to a higher price for the asset.

“Our previous letter to investors we called ‘Bitcoin Shortage’. And the price is behaving accordingly to the shortage,” Morehead writes.

The report states that the number of active Bitcoin users is steadily growing. As the number of users grows from 10,000 to 100,000, the price rose and became less volatile.

“The price rose because a million people owned Bitcoin. Every couple of years the number of people using Bitcoin grows tenfold. So does the price.”

Data: Bitcoin Demand = 3x Supply / Pantera Capital.

Morehead invites us to imagine how high the price could rise with Bitcoin daily used by billions of users. Pantera Capital’s optimism stems from PayPal’s involvement and the number of PayPal users.

Co-founder and CEO of Blockstream Adam Back supports Morehead’s view.

So $25k* on 25th, three new ATHs $24.7, $24.8 and $25k in a day. You think institutions did that? On Christmas day? Retail did it — only people near a keyboard.

(*$25k if you pick @bitstamp or @krakenfx tho not quite on @bitfinex) pic.twitter.com/6PmiEcdn7v

— Adam Back (@adam3us) December 26, 2020

“Local highs of $24 700 $24 800 and $25 000 [on Christmas Day] December 25. Do you think these were institutional investors? On Christmas? Retail — people at keyboards.”

On November 12, PayPal announced that it opened access to Bitcoin and several altcoins for its American customers.

On December 2, from a survey it became known, that 65% of PayPal customers are willing to pay with Bitcoin for goods and services.

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