- Tram Ho
Square’s $ 50 million investment in Bitcoin last month was surprisingly fruitful as the price of the cryptocurrency has just risen to unprecedented levels since its slump in 2017.
Specifically, in October, Square stated that it bought 4,709 bitcoins in 1 day for approximately $ 50 million. This move is part of a strategy of placing additional bets on the crypto market, which aims to allow users on their platform to exchange, buy, and sell with this digital currency.
Specifically, Square bought 4,709 bitcoin units for an average price of $ 10,618.
Since the transaction in October, the bitcoin price has risen nearly 70% to a high of $ 17,850 in trading on Tuesday. Thus, on paper, Square has made a profit of about $ 34 million for the first investment. this post less than 1 month later.
Immediately, Square shares rose 6% in the session on Wednesday, to $ 190.74.
The reason why the price of Bitcoin soared may be due to the outbreak of Covid-19 that affected the global economy. Economic stimulus policies, such as quantitative easing in response to epidemics by countries, have caused many legal currencies to devalue.
Some other reasons given by Forbes such as the US election, billionaire Jack Ma’s Ant Group was suspended for the first time (IPO) in China. Also, earlier this month, PayPal Holdings made a market blast by announcing it would give customers access to digital currencies. At the same time, JPMorgan Chase & Co Coin were also put into use for the first time.
PayPal’s news comes amid a series of signals that traditional financial institutions are very open to digital currencies.
Fidelity Investment launched a Bitcoin fund in the summer, becoming one of the most well-known companies to publicize their interest in cryptocurrencies. Public companies like Square and MicroStrategy have also invested in bitcoin. The European Central Bank will also begin to experience the digital currency as China continues to experiment with the digital yuan.
While a few countries have begun to show interest in creating digital currencies, there is little evidence that it will replace physical currency anytime soon.
In a post on Tuesday, billionaire investor Ray Dalio outlined 3 reasons why he remains so skeptical about Bitcoin.
Dalio argues that Bitcoin is “too volatile for merchants to use”, and its asset storage is also inefficient due to its large price volatility. According to the veteran investor, owning Bitcoin does not mean that buying power will be kept stable.
Even if Bitcoin qualifies to be used in the bank, the billionaire said the government has the ability to ban the currency, making it very dangerous to use.
Source : Genk