Bitcoin gained over 50 dollars late on Tuesday on news that PayPal Payments Hub will integrate bitcoin. Prices rallied from just under $380 to over $446 for one bitcoin. The next day, however, saw BTC prices retrace most of the gains and eventually reaching a low of $410. Today the selloff continued with BTC/USD trading slightly above the $400 round figure.

Paypal will integrate bitcoin payments to its PayPal Payments Hub. The Hub is its alternative payment platform for digital goods. Customers will now be able to pay participating merchants with bitcoin for games, videos, music, ebooks, and other digital content. The offer will be limited to merchants based in North America for now. To facilitate the BTC payments, PayPal has entered into agreements with three bitcoin payment processors Coinbase, BitPay, and GoCoin.

This is another PayPal step to embrace bitcoin. Earlier this month, Braintree, a payment platform owned by eBay, announced that it will integrate BTC payments. Both PayPal and Braintree are owned by eBay.

Peercoin Falls 30% on NuBits Launch

Peercoin fell over 30 percent on the launch of NuBits, a new cryptocurrency that will use the existing PPC infrastructure. Prices fell from $1.44 to a low of $0.957 in five hours with most of the losses transpiring in the first 30 minutes after the announcement. Since then PPC/USD has somewhat stabilized and is currently trading at $1.077 per coin. However further losses can not to be excluded, especially if the pair falls below the $1 parity level.

Why did market participants sell Peercoin on the announcement?

Several objections were floating around in traders circles:

1. NuBits aims to fix the value of one unit to $1 US dollar, essentially tying the crypto to a currency that will be slowly inflated away
2. You can buy NuBits with Bitcoin, you don’t need to own any Peercoins, so no buying pressure
3. The shareholders of NuBits will get paid in PPC and they may turn around and sell right away on the market, thereby depressing the price. This effect may be partially offset by custodians buying the PPC needed for distribution to the shareholders.
4. The whitepaper talked about PPC like it’s an inferior cryptocurrency compared to NuBits
5. It’s not clear how the fixing system will work. The paper proposes the creation of a virtual decentralized central bank with the power to set interest rates.
6. Currently, the bots that will fix the prices are only deployed on the sell-side. For example currently on BTER, there is a huge sell wall placed at 0.00224629 BTC, corresponding to a price of around $1 in US dollar terms. But there is no such wall on the buy side, so essentially prices are only prevented from going up, not down. The white paper proposes that the buying pressure will be incentivized by raising interest rates but we will need to see if this will function in practice.

In short, while the new features proposed in the NuBits whitepaper are revolutionary, they are also highly experimental and not tested. In addition, it’s not clear that the effect on the Peercoin price will be positive even if the new project is successful. One could make the case that most of the people looking into NuBits will be previous Peercoin supporters. They will already own some PPC thus they wouldn’t need to buy the Peercoins needed for distributing dividends. In the short-term, you may end up with a situation where there is only sell pressure by the shareholders looking to liquidate their Peercoins on the market.

Trade global forex with the Innovative Broker of 2022*. Choose from 50+ forex markets 24/5. Open your FXOpen account now or learn more about trading forex with FXOpen.

* FXOpen International, Innovative Broker of 2022, according to the IAFT

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.