Stripe makes $53B unsolicited bid for PayPal; Bitcoin jumps over 5%

Author: Dominic Basulto, The Motley Fool

In mid-July, fintech firm Stripe made an unsolicited $53 billion bid for PayPal (NASDAQ: PYPL). The move is positive for the crypto market overall, and potentially even more significant for Bitcoin (CRYPTO: BTC).

Bitcoin had been in a steep decline for much of the year, down 25% year to date. However, following the $53 billion Stripe bid, Bitcoin has perked up, rising more than 5% since the news broke. Some analysts now believe Bitcoin could reach $80,000 by the end of August.

Crypto Goes Mainstream

The central theme of the Stripe-PayPal deal is that digital currencies are moving into the mainstream. The future of payments will almost certainly include a mix of traditional cryptocurrencies such as Bitcoin, as well as dollar-pegged stablecoins. Both Stripe and PayPal are heavily involved in the stablecoin business.

Bitcoin's recent market gains can largely be attributed to the fact that PayPal, with its 400 million active customer accounts, could serve as a powerful vehicle for bringing Bitcoin to the masses. PayPal already allows customers to buy and sell crypto directly from their accounts, and this deal could further encourage retail businesses and small business owners to adopt Bitcoin.

Will Bitcoin Finally Be Used for Payments?

Bitcoin, as the first digital currency, was designed to eventually become a mainstream means of payment. Over time, the thinking goes, Bitcoin would be used to pay for everything from everyday consumer goods to high-end luxury items.

Billionaire venture capitalist Tim Draper has long advocated for Bitcoin as a mainstream currency. He believes Bitcoin has the potential to rally to $250,000 or higher, provided consumers start using it for everyday purchases. Draper also speculates that retailers might eventually adopt a "Bitcoin only" policy, accelerating this shift.

To date, that has not happened. Bitcoin has primarily been used as a store of value — a long-term appreciating asset rather than a medium of exchange.

This is why the Stripe-PayPal deal looms as potentially significant. Once consumers begin using stablecoins for purchases, they may also embrace paying with Bitcoin.

But What About Stablecoins?

Stablecoins have taken on some of the role that Bitcoin was expected to play in payments. Even Cathie Wood of Ark Invest, a longtime Bitcoin supporter, has acknowledged this.

In November, Wood downgraded her price target for Bitcoin, citing the growing dominance of stablecoins. Still, she expects Bitcoin to reach $1.2 million by 2030.

It is easy to see why crypto investors are bullish on the Stripe-PayPal deal. While the deal does not impact Bitcoin directly, its indirect effect — encouraging everyday consumers to adopt digital currencies — could be transformative.