The bitcoin and cryptocurrency community was yesterday set alight by news payments company Square SQ , led by Twitter TWTR chief executive and outspoken bitcoin advocate Jack Dorsey, had bought $50 million worth of bitcoin.
The bitcoin price, which had been hovering at just over $10,000 per bitcoin since early September, has jumped more than 5% following the news, climbing over $11,000 and potentially resuming the bull run that drove it from lows of under $4,000 in March to $12,000 in less than six months.
Today, the bitcoin price has continued to rally and remains closely tied to broader markets that were yesterday boosted by renewed faith U.S. lawmakers will soon agree on a large-scale stimulus bill—which would flood the market with trillions of freshly printed dollars.
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The bitcoin price has jumped 5% since yesterday, with the bitcoin and cryptocurrency community … [+] cheering Jack Dorsey’s payments company Square buying some $50 million worth of bitcoin.
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“Investors continue to be focused on the potential for more stimulus measures,” Russ Mould, investment director at brokerage AJ Bell, said via email, adding global markets are “keeping an eye” on U.S. political developments.
On Thursday, the White House reportedly signalled it wanted to secure a large-scale stimulus bill, a head-spinning u-turn from earlier in the week when U.S. President Donald Trump abruptly ended talks via Twitter—sending traditional markets and the bitcoin price sharply lower.
“On super long-term charts, bitcoin has always been somewhat related to the stock markets, behaving as one might expect of a high-risk asset, especially reacting loosely to the addition or removal of stimulus from central banks,” Mati Greenspan, the founder of market analysis group Quantum Economics, said in an email newsletter this week, pointing to “increased participation from institutional traders” as strengthening this relationship “even on short-term charts.”
Since the coronavirus crash in March, stock markets as well as bitcoin and cryptocurrency prices, have been overwhelmingly driven by investor expectations that governments around the world, led by the U.S. and the Federal Reserve, will continue to support them with unprecedented levels of stimulus spending.
The bitcoin price began to climb along with stock markets yesterday, coinciding with Square’s revelation it had bought 4,709 bitcoin for $50 million—about $10,600 per bitcoin and representing almost 1% of the company’s total assets as of the second quarter of 2020.
The bitcoin price has added almost 5% over the last few days, climbing along with the stock markets … [+] as investors eye further U.S. stimulus spending.
Square, along with its CEO Jack Dorsey, has long championed bitcoin and its underlying philosophy of decentralization.
Dorsey, who earlier this month said bitcoin is “probably the best” native currency of the internet, has previously gone as far as saying bitcoin has the potential to be the world’s sole currency by 2030.
Back in 2014, Square began letting merchants accept the cryptocurrency, rolling out bitcoin buying and selling on its popular Cash App in 2018 and reporting bitcoin operations revenue grew 367% annually in the first quarter of this year. Square Crypto, an independent team within the company, was created last year tasked with supporting open-source bitcoin development.
“We believe that bitcoin has the potential to be a more ubiquitous currency in the future,” Amrita Ahuja, Square’s chief financial officer, said in a statement announcing the company’s bitcoin holding.
Square has become the second publicly-traded company in three months to add bitcoin to its balance sheet, following business intelligence and software company MicroStrategy’s MSTR $425 million bet on bitcoin over the summer.