Today is March 2, 2021, and the current price of Bitcoin is $48,850.
PayPal is in the process of buying a Cryptocurrency Custody Firm called Curv. Some of you familiar with the industry and PayPal’s movements will recall that PayPal was in talks to buy the different cryptocurrency custody firm BitGo last year; however, since that eventually fell through, PayPal seems to have turned their eyes to Curv. PayPal reportedly offered BitGo $750 million; however, it is unclear if they offered the same amount to Curv. Initial reports have the deal somewhere north of $200 million, but no exact price has been determined as yet. This furthers PayPal’s ambition to truly enter the cryptocurrency industry. Up to now, they have allowed various cryptocurrency platforms to link PayPal as payment methods, but they are now taking the step forward to be able to handle cryptocurrency themselves. A Crypto Derivatives Platform called FTX is one such platform that now supports deposits via PayPal. The benefit of linking and using PayPal is that most currencies are supported, and users can get instant payments. With that said, FTX CEO Sam Bankman-Fried noted that due to PayPal’s fees, larger payments would be cheaper for users if sent via Bank Wires instead. As PayPal finalizes this deal with Curv, they will then be able to handle cryptocurrency directly, and undoubtedly make it easier for more people to be able to access and store cryptocurrencies.
The second headline comes from the Hedge Fund, Third Point, located in New York. Third Point’s Founder & CEO, Daniel Loeb has said on Twitter that he will be taking a deep dive into cryptocurrency. He noted that cryptocurrencies are a test of being open to new and controversial ideas. This comes as more and more Wall St. firms and investors enter the cryptocurrency market. Loeb also stressed the importance of maintaining healthy skepticism as he learns more about the industry. He also wondered if it was too late to join what he called the “crypto party” even if mainstream adoption is still in its early days. Personally, I say NO! It is not too late to join the party. With that said, and while Wall St. has been warming up to cryptocurrencies lately, the industry still has its critics who simply refuse to look past the top layer and try to truly understand the industry and the technology. One such critic is Peter Schiff, who replied to Loeb’s tweets saying, “No deep dive is required. The intellectual pool is shallow.” Schiff also compared Bitcoin to collecting Beanie-babies as there is no intrinsic value. However, to me, simply writing off Bitcoin and cryptocurrencies for that matter as a scam and a pyramid scheme is highly incorrect of what the industry is and has been since its creation. One thing to note is that Schiff is the chairman of Schiff Gold, a platform all about buying and selling Gold. Bitcoin can be seen as a competitor to gold and is often referred to as digital gold. Peter Schiff says that he has long recommended investors to put aside 5-10% of their portfolios in physical precious metals. Instead, what we are seeing is that investors have been aside sections of their portfolios in cryptocurrencies. You cannot paint them all with a single brush, as each chain has set out to accomplish different goals. Ethereum and VeChain’s goal, for example, set out to push blockchain adoption and make it easier for companies and platforms to move to blockchain. Bitcoin’s store of value along with all of the benefits that blockchain technology offers make it an impelling investment case, one that is not experienced anywhere else. While the industry will always have its critics like Peter Schiff and Warren Buffet, who are both truly smart investors in their own rights, you have others like Jamie Dimon who did the research and eventually came to support the industry, as many Wall St. Firms are doing now as well.
The final major headline follows the recent movement of Wall St. into the cryptocurrency industry. Goldman Sachs has announced that it is restarted its cryptocurrency trading desk and will begin dealing Bitcoin Futures and non-deliverable forwards for clients starting next week. The trading desk reboot follows institutional interest in Bitcoin and cryptocurrencies. Many of these institutions have viewed Bitcoin as a hedge against an ever-inflating dollar as governments and central banks continue to print money in the face of much-needed stimulus packages. Additionally, despite the high level of volatility the industry experiences, due to record-low interest rates, many investors have been willing to take riskier positions in cryptocurrencies in the hunt for yield. The non-deliverable forwards are a type of derivative that allows investors to speculate on the future price of Bitcoin. Goldman Sachs is now one of many financial institutions offering services in the cryptocurrency industry, joining CME Group, Citi, Bank of New York Mellon, Fidelity Investments, Intercontinental Exchange, and JP Morgan.
These developments from PayPal to Third Point’s CEO to Goldman Sachs continues to show the movement of Wall St. into the cryptocurrency space, something that the industry has been looking forward to for years. Bitcoin extends its mainstream adoption with many large institutions opting to hold Bitcoin on their balance sheets, some even going far enough to offer employees the option to have some of their salaries paid in Bitcoin. This historic run shakes the foundation of traditional finance, and as many are investing smarter and safer than before, the industry grows each day with more and more people and companies entering the market.