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Shares of PayPal (NASDAQ: PYPL) gapped slightly higher after the online payment company announced yesterday that its U.S. consumers will now be able to make payments at its online merchants with their crypto holdings, a move that could largely increase the use of digital currencies.
Fundamental analysis: New crypto service launched
Paypal customers who own Bitcoin, Ether, Bitcoin Cash, and Litecoin will from now on be able to convert those digital assets into traditional currencies to make payments, Paypal said. The new crypto checkout service will become available at all of Paypal’s 29 million merchants later this year, according to the company’s statement.
“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” said President and chief executive Dan Schulman.
Paypal is now one of the major financial giants to support cryptocurrencies and help drive the rally in digital assets’ prices. The move comes just a few days ago after Tesla said its clients are now able to buy its cars using Bitcoin.
While many still remain skeptical about Bitcoin due to its high volatility, PayPal hopes its new offering will change that because the ability to settle the transaction in fiat currency will help merchants avoid the volatility risk.
“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Schulman said.
Technical analysis: Sitting at the support
PayPal stock price gapped slightly higher at yesterday’s open before plunging lower with the rest of the tech stocks. Still, shares closed 0.37% in the green to erase a small portion of losses recorded on Monday.
Overall, the price action is sitting at the double support, consisting of the 100-DMA and a 1-year ascending trend line. A break of this zone, as well as a trip south of the horizontal trend line at $227, would accelerate a move lower. Swing traders looking to invest in PayPal shares may decide to use this support hoping for a quick bounce towards the next resistance zone at $255.
Summary
Online payments giant PayPal is expected to announce a new service that allows U.S. consumers to use their crypto holdings to make payments at millions of its global merchants, the company told Reuters.