Bitcoin is being bought en-masse by retail investors amid this strong rally higher, market data shows. Recent analysis found that PayPal’s addition of cryptocurrency purchases could be a key factor behind BTC’s rally to $28,000.

Pantera Capital CEO Dan Morehead recently shared the chart seen below to his Twitter. Pantera Capital is a leading digital asset investor, with large positions in Bitcoin and many leading altcoins.

The chart shows the “implied” purchases of BTC via ItBit, which is PayPal’s crypto exchange partner for the retail integration. Per the analysis, there may be more Bitcoin bought each day by PayPal users alone than there are being mined. As Morehead, a long-time macro investor, explained to his followers:

“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.”

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

This analysis was a follow up to a report from Pantera that found that Bitcoin’s demand trends are truly shifting in a positive direction. In that report, Morehead wrote:

“In the last seven months, we’ve had two huge shifts — one in demand, one in supply — both upwards. On the demand side, we’ve had public companies like PayPal enter the market. That shifts the demand curve much higher. At the same time, the supply of newly issued BTC was cut in half in May — as part of the every-four years Halving of bitcoin issuance. Fewer BTC are available. We titled our previous investor letter, Bitcoin Shortage. The price acts like there’s a shortage.”

Wall Street wants in on Bitcoin as well, which should help push prices higher. A narrative has formed that Bitcoin is a hedge against inflation and a potential competitor to gold, which has made the cryptocurrency appealing to Wall Street this past year.

Technology analyst Kevin Rookie recently noted that Grayscale’s Bitcoin Trust added 12,319 BTC in a single day earlier this month:

“Grayscale’s Bitcoin Trust just added 12,319 BTC to $GBTC in a single day. That’s more than the 11,512 BTC they added during all of last week, when Bitcoin broke its ATH.”

Most of Grayscale’s clients are institutional investors looking for exposure to the digital asset space. Many think that Grayscale’s accumulation of BTC and other cryptocurrencies has been a key driving force in the rally over the past year.

Bitcoin is likely to continue moving higher as these buyers continue to absorb the decreasing supply of BTC, analysts say.

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