It looks like Paypal decided to change their strategy from trying to corner the market by trying to suck in as much Bitcoin as possible to their closed ecosystem, by using their huge existing user base.
there is more to it then that..
there is what i call the 'stirring the pot' problem
if funds are locked into a system with no desire/ability to exit those coins. then people just end up swapping within the system. this means no buying new coin(at corporate paypal level) no exiting with the coin(at customer level). and so its just the same coin stirring in the pot.. being held in custody but not blockchain moving. and instead just changing users account balance numbers. where users are upset by having to sell at a loss when the only option to exit paypal was $$
where as letting people exit holding btc and allowing new users to buy and exit. means new buyers are then requesting coins, which paypal doesnt have to give(less in custody). so paypal buys more to then give.
which at this precise moment is good because its cheap to buy them.
new coins get to stir in the custodial pot at a new lower average cost..
EG instead of stirring the pot of coins where they initially may have been bought at $60k by paypal corporate, and lots of users were at a 50% loss when selling yesterday within paypal(as their only way out previously). those users can exit holding their coin and be happier to be non custodial holders. and not forced to sell at a loss
whereby fresh customers can buy fresh coins. at lower prices. and paypal is then able to 'average down' its custody value of coins it has and keep customers happy
