October 22, 2020       Jim Stewart

Paypal gave the crypto market a huge boost today by announcing that it was going to allow customers to buy, sell and hold Bitcoin and other virtual coins (Ethereum, Bitcoin cash and Litecoin) in their online wallets.  They are partnering with the Paxos Trust Company to offer the service.

Starting in 2021, Paypal customers will be able to use these cryptocurrencies to shop at 26 million merchants on the company’s network.  It also plans to expand the service to its Venmo subsidiary and other countries in the latter half of 2021.  The company has 346 million active accounts around the world and processed $222 billion in payment during the 2nd quarter of 2020.

Paypal will convert the cryptocurrencies to the merchant’s local currency when goods and services are bought and sold. This set up makes the account holder bear the risk of a fluctuating coin price (and reward!) Historically, cryptocurrency prices tended to be quite volatile. This makes them less appealing to merchants and frustrating for shoppers due to the cost and timing of liquidations.  Having a larger market and seasoned companies creating the marketplace will help with these pitfalls.

Mobile payment company Square and stock trading app Robinhood have allowed users to buy, sell and hold cryptocurrencies for some time.  The Paypal announcement is notable for two reasons:

  1. Paypal was involved in Facebook’s cryptocurrency project called Libra in 2019 but pulled out after a few months.
  2. Paypal has a vast and established network of users which gives additional credibility to cryptocurrencies as an asset class.

It’s not surprising to see Bitcoin and Paypal at new 52 week highs following this announcement.

REGULATORY DISCLOSURE

Carmichael Hill & Associates, Inc. is a U.S. Securities and Exchange Commission Registered Investment Advisory firm. Registration does not imply that the SEC has endorsed or approved the qualifications of Carmichael Hill or its respective representatives to provide any advisory services. Advisor does not render or offer to render personalized investment advice or financial planning advice through this medium. Advice can only be given after:

  1. Delivery of a disclosure statement by advisor to client.
  2. Execution of our Investment Advisory Agreement between the client and the advisor.
  3. Initial payment of the planning fee or investment advisory fee by the client to the advisor.
  4. Advisor will not solicit or accept business in any state in which she or he is not properly registered or otherwise qualified to conduct business by virtue of a state “de minimis” exemption.
DISCLAIMERS

The information in this web site is based on data gathered from what the Advisor believes are reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The identification of specific funds and model portfolios is being made on the assumption that the investor would participate in that investment or portfolio on a long-term basis and only after consulting with their investment advisor to determine their needs and tolerance for risk. With respect to any such identification, there can be no assurance that the fund or model portfolio will in fact perform in the manner suggested.

The results do not represent actual trading due to the timing of the clients’ trades and their trading costs. They may also not reflect the impact that material economic and market factors might have had on the advisor’s decision making if the advisor were managing the clients’ money. Investment and portfolio results may be different than the results the advisor’s discretionary clients achieve due to the timing of trades and the market conditions.

All references that might be made to an investment or portfolio’s performance are based on historical data and one should not assume that this performance will continue in the future.

LINKS DISCLAIMER

At certain places on this Carmichael Hill & Associates, Inc. Internet site, live ‘‘links’ to other Internet addresses can be accessed. Such external Internet addresses contain information created, published, maintained, or otherwise posted by institutions or organizations independent of Carmichael Hill & Associates, Inc. CHA does not certify, endorse or control these external Internet addresses and does not guarantee or assume responsibility for the accuracy completeness, efficacy, timeliness, or correct sequencing of information located at such addresses. Use of any information obtained from such addresses is voluntary.