🌎 PayPal Stablecoin Market Cap Surges to $907 Million in August

PayPal stock has entered a bull market, experiencing a rise of over 26% from its lowest point this month.

PayPal USD Stablecoin’s Market Cap

PayPal USD, the company’s stablecoin launched in August 2023, has been performing well. Recent data shows that its market cap has surged in the past few weeks, crossing the significant level of $907 million on August 21. This represents substantial growth for a stablecoin that started the year with a market cap of $264 million.

Stablecoin issuers like PayPal generate revenue primarily through interest rates and transaction costs. With U.S. interest rates ranging between 5.25% and 5.5%, PayPal could potentially earn over $50 million annually in interest.

Competitive Landscape

The stablecoin industry is highly competitive. Tether, the largest stablecoin with over $117 billion in assets, reported a quarterly profit of over $4.5 billion in Q1 2024, primarily from interest and mark-to-market gains on assets like Bitcoin and gold.

Other notable players include Circle’s USD Coin, which has over $34 billion in assets, and Ripple, which is developing its stablecoin, RLUSD, backed 1:1 with the US dollar. Additionally, Ethena’s USDe has accumulated over $3 billion in assets, and Ondo’s OUSD has $340 million in assets. These stablecoins are gaining traction as they offer monthly returns to their holders, with USDY providing a 5.35% AP derived from U.S. Treasuries investments.

PayPal Stock Performance

PayPal’s stock has also benefited, reaching its highest level in over 52 weeks and pushing its valuation to over $71 billion. However, it remains significantly below its pandemic-era peak of $309, when its valuation exceeded $300 billion.

The stock surge followed an upgrade from analysts at Daiwa, who changed their rating from neutral to outperform, citing PayPal’s potential to succeed despite fierce competition from companies like Apple, Google, and Affirm. Analysts at Argus Research upgraded the stock from a buy to a hold, while Mizuho, JPMorgan, and Barclays maintained their outperform ratings.

The stock’s recovery was also driven by PayPal’s mixed second-quarter financial results. Revenue increased by 85 to $7.8 billion, although active accounts declined to 429 million. PayPal continued to return cash to investors through stock buybacks.

Looking ahead, the stock might continue to rise as it forms a golden cross-chart pattern, a bullish indicator that occurs when the 50-day and 200-day Exponential Moving Averages cross. The stock has also surpassed the critical resistance level of $70.69, the previous year-to-date high, amidst a high-volume trading environment, with the accumulation/distribution indicator pointing upward.