PayPal Holdings (NASDAQ:PYPL) made a major announcement on Jun. 7 that it now allows the transfer of cryptocurrencies between PayPal and other wallets and exchanges. As a result, investors can expect that Bitcoin (BTC-USD) will move higher over the coming year.
PayPal says this enhancement has been one of the most desired by its customers. This could help BTC become more popular. PayPal users’ trades and commerce activity will have a direct effect on the cryptocurrency. Investors can conclude that this move will significantly help the cryptocurrency’s popularity, and hence, its price could move higher.
How This Could Enhance Bitcoin Transfers and Transactions
One reason is that PayPal restricts the number of cryptos on its app. It allows only BTC and three others — Ethereum (ETH-USD), Litecoin (LTC-USD), and Bitcoin Cash (BCH-USD). These are the only cryptos that one can buy or sell and use to pay for goods and services on its app. So, the effect of the transfers unloosening will have a concentrated effect on these cryptos.
For example, you could buy BTC tokens on another exchange that does not charge a fee to convert U.S. dollars into Bitcoin. Two brokerages that allow this now are Robinhood Markets (NASDAQ:HOOD) and Webull, both very popular with millennials. Moreover, PayPal does not charge to use these four cryptos to purchase or sell items or services.
Therefore, you could transfer your BTC tokens to PayPal at no cost to pay for the purchase of an item. Vice versa, you could transfer Bitcoin received from a sale of an item to Robinhood and then convert that into U.S. dollars — all at no cost. Since PayPal allows Bitcoin to be held on its app as a digital wallet at no charge, people could transfer Bitcoin at no cost to purchase items.
The effect will be significant for millennials as they realize that Bitcoin is one of the favored cryptos on PayPal.
Where This Leaves Investors in BTC
PayPal pointed out in an interview with Decrypt magazine that they believe a “substantial portion of commerce” will move to digital currencies. That means people will increasingly use Bitcoin to buy items in the future.
Decrypt pointed out that this is unique given the financial battering that Bitcoin and other cryptos have endured. For example, BTC, at just over $30,000 per token on Jun. 8, is down 36.4% from $47,686 on Dec. 31.
This change by PayPal, especially if it is copied by other apps, like Cash App from Block (NYSE:SQ), will help people consider Bitcoin more useful. You could be at a restaurant and not want to use your credit cards. You could transfer Bitcoin from your brokerage account at Robinhood or Webull to PayPal to cover the meal.
Or you could find a high-ticket value item online you want to buy. But now with higher inflation, you need an extra funding source to cover the high-value transaction. This ease of transfer will allow people to consider buying Bitcoin not only as a store of value, but as an increasingly useful transaction source.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.