Square Buys $50 Million Worth Of Bitcoin

Earlier today, payments company Square

SQ
announced that it had purchased $50 million worth of bitcoin, a development that generated significant visibility.

Square, which was cofounded by Twitter

TWTR
CEO Jack Dorsey, bought more than 4,700 units of the digital currency, enough to account for roughly 1% of the organization’s assets as of the end of this year’s second quarter.

Square revealed this transaction shortly after business intelligence firm MicroStrategy

MSTR
purchased more than $400 million worth of bitcoin over the last few months.

MicroStrategy revealed in August that it had acquired $250 million worth of the cryptocurrency, and announced an additional $175 million investment in September.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Several experts commented on the recent purchase made by Square, weighing in on its implications.

Tim Enneking, managing director of Digital Capital Management, described this latest news as “a tremendous endorsement” for bitcoin.

“It is more impactful than the MicroStrategy announcement,” he noted.

“Although the MicroStrategy investment is considerably more, the company and its CEO (Michael Saylor) are not nearly as well known as Square and Dorsey, particularly in the tech sector,” said Enneking.

John Todaro, director of institutional research for TradeBlock, also spoke to the significance of this latest announcement.

“This is very big,” he stated.

“Unlike institutional investment adoption from a fund standpoint, which we have seen in the past, we are now seeing institutional adoption from a corporate standpoint in which bitcoin is being treated less as a speculative investment and more as an inflation resistant reserve asset on corporates’ balance sheets,” Todaro added.

Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, also shed some light on the situation, speaking to the potential price implications.

“This purchase by Square bodes well for Bitcoin and the crypto space,” he stated.

“We recently saw other market participants also accumulate Bitcoin, such as MicroStrategy, which indicates that current valuations (around $10K) are considered attractive by institutional investors.”

Jesse Proudman, CEO of crypto hedge fund Strix Leviathan, added some final thoughts.

“As Bitcoin holds value for different reasons to different people, institutional adoption can take many forms,” he noted.

“Given Jack Dorsey's prominence, Square's Bitcoin acquisition will bring additional attention to the notion of Bitcoin as a corporate hedge to USD inflation.”

“This marks the second public company following MicroStrategy's recent purchases (collectively $425M) to adopt this strategy and is likely indicative of a wave of further interest.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.