PayPal’s entry into the cryptocurrency market could be having a dramatic impact on the Bitcoin (BTC) price. 

In a newly published report, crypto investment firm Pantera Capital says a Bitcoin shortage is at the heart of the recent price surge and that the majority of newly minted BTC is being scooped up by PayPal.

PayPal’s new crypto service is “already having a huge impact,” Pantera claims, adding that the payment merchant is snatching up roughly 70% of all the new BTC in circulation.

Citing itBit data, Pantera claims:

“When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins.”

According to Pantera, the data suggest that PayPal and Cash App combined are buying up all of the newly-issued Bitcoin.

Bitcoin’s monetary policy is programmed to be deflationary over time. With widescale adoption, that leads to higher purchasing power and supply scarcity. Pantera claims it is the latter that is contributing to BTC’s parabolic surge.

PayPal launched its crypto trading services in the U.S. earlier this month, allowing customers to trade up to $20,000 a week. The platform will be rolled out globally in early 2021.

The online payment merchant has 300 million active users, which makes its foray into digital currency a major stepping stone for adoption.

Pantera says it’s a lot easier to purchase Bitcoin now than it was during the last bull market in 2017. In addition to PayPal, retail onramps into Bitcoin and other digital currencies now include Cash App and Robinhood.

Wider adoption means the digital currency is more likely to sustain higher price levels. Although Bitcoin remains highly volatile, it carved out an unusually long period of stability before catapulting higher over the past two months.

Bitcoin price chart by Cointelegraph