Wednesday, 19 May 2021 saw a new all-time high in bitcoin trading volumes on PayPal.
$300m #Bitcoin traded on PayPal last Wednesday. A new all-time high for the app! 🙌 pic.twitter.com/IZz70jWSYH
— Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) May 29, 2021
In just one day, more than $300 million worth of BTC were traded on the app, a peak that clearly surpasses even that of January.
PayPal enabled the buying and selling of cryptocurrencies directly on its app only in November last year, but it was immediately a great success, so much so that the company has seen its revenues grow in a very short time.
Indeed, it is suspected that the huge demand for BTC via PayPal may have been behind the remarkable bullrun that began in November, even though the curve of daily trading volumes reveals that, after the boom in January, volumes had begun to fall.
From mid-April onwards, when the price started to fall, volumes started to rise again, peaking on the day of the flash crash that briefly pushed the price of bitcoin back up to $30,000.
While these volumes from November to January suggest that demand for BTC on PayPal was indeed high, the huge spike on 19 May suggests that trading was primarily generated by strong selling pressure likely caused by panic.
Trading Bitcoin on PayPal
On the other hand, the average PayPal user who invests or speculates in cryptocurrencies is likely to be primarily an occasional amateur investor, therefore much more likely to trade driven by emotion, rather than an experienced trader following a rational strategy.
However, it has to be said that anyone who bought on PayPal between November and December, even if they had sold at $30,000 on 19 May, would still have sold at a profit, as the first time ever in Bitcoin’s history that its price rose above that figure was only on 3 January 2021. If, however, the purchases were made during the peak of 9 January, when the price had risen to $40,000 and PayPal’s daily trading volume jumped above $200 million for the first time, then a sale at $30,000 would have generated a loss of 25%.
The trading volume curve on PayPal rather clearly indicates a correlation with sudden and unexpected price movements, suggesting just that it is emotional behaviour due to a very superficial knowledge of crypto markets, and their volatility.