In the letter
- Bitcoin’s price is rising as companies continue to buy the asset in bulk.
- According to Pantera Capital, there could be a bitcoin shortage.
- However, experts say not to worry – the asset will continue to be readily available.
A chaotic political situation in the US is causing the Federal Reserve to print more money, which, according to one post, drives up the price of other assets published yesterday by the Blockchain Investment Fund Pantera Capital.
One of those assets is Bitcoin, and its price is going through the roof thanks to tech companies Purchase of much of the cryptocurrency.
“PayPal and Cash App already buy more than 100% of all newly issued bitcoins,” the post said. “If other, larger financial institutions follow suit, the supply shortage will become even more unbalanced. Supply and demand only balance each other out at a higher price. “
Given that big tech companies are buying so much Bitcoin, the price will only go up – but will this make cryptocurrency less accessible to ordinary people who don’t have millions of dollars to fit into the cryptocurrency?
According to Pantera Capital, a bitcoin shortage is possible. But don’t worry (yet!) – experts who spoke to them Decrypt said there is nothing to worry about.
Pedro Febrero, co-founder of the Crypto Nerds Academy and an analyst at Quantum Economics, said the number of bitcoins “focused on fewer hands over the long term” could be a “problem for the democratization of finances.”
However, he added that bitcoin supply was limited and large companies would eventually have to sell it. “Finally, we shouldn’t forget that not all Bitcoin are simply ‘hacked’,” he said.
Research by blockchain analytics companies Chain analysis last week showed that the amount of Bitcoin available for purchase depends on whether those who hold it want to sell it or trade it.
Around 77% of all 14.8 million Bitcoin mined are in illiquid wallets (wallets that don’t send a lot of Bitcoin, but stick to it). This shows that large buyers are basically snapping up the asset and watching its increase in value.
And that’s not necessarily a bad thing.
Shawn Dexter, decentralized financial analyst at Quantum Economics, said, “Big tech institutions that own and hold a large stake in Bitcoin will only serve to increase the network’s underlying security and drive value.”
He also said that regardless of the price of the currency, “the option to buy an asset that no single power can unilaterally inflate is a form of democratization” and that people can continue to use it as a store of value –so many people are doing it right now.
“Essentially, Bitcoin will find a balance at some point, maybe at an extremely high price point and maybe with institutions that hold high in it,” he added. “But that’s irrelevant, because the average person will still be able to store $ 100,000 of value in Bitcoin, whatever the price.”
If things continue as they are, the price of Bitcoin will keep rising.
You don’t have to worry about the currency disappearing though: with companies like PayPal, buying the crypto is now easier than ever.
As Pantera Capital said in the Post, “The friction used to be quite annoying when buying Bitcoin: take a selfie with your passport, wait days to a week to activate, daily limits.”
“Three hundred million people just got instant access to Bitcoin, Ethereum and other cryptocurrencies.”