The recent push to market capitalization of $ 1 trillion in bitcoin can at least be partially attributed to institutional investors; companies investing on behalf of or as part of their asset allocation strategies.
Square, one of the largest Bitcoin-holding companies
Along with MicroStrategy , now Tesla, Square is one of the asset 's biggest institutional buyers. However, unlike these other two companies, Square buys bitcoin to deliver it to its users directly through its app. A potential signal on thee strong retail interest behind Bitcoin, a driving force behind Bitcoin's rally to $ 57K.
The CEO of Square, the publicly traded financial payments company that aims to disrupt traditional finance, Jack Dorsey , is a strong supporter of bitcoin.
In January, one million users bought bitcoin for the first time last month via Square's Cash app, with 24 million monthly users on the Cash app, that's still an untapped 23 million user investor source for Bitcoin.
Maybe capitalize on it and increase your Bitcoin income , in its fourth quarter version Square announced another $ 170 million purchase of BTC.
Square reportedly paid $ 51,000 per BTC based on its schedule in Q4. Bitcoin is currently at 44,800 $ at the time of writing, which means their position is down about 12% from the time of purchase. However, Jack Dorsey and Square executives show no signs of willingness to sell their important position, which offers both a message of hope and possible concern for the average retail investor. Square, as a public company, is first obligated to its shareholders - and if the leadership was under pressure from its other institutional shareholders.To sell the asset if it drops significantly in price due to volatility, this event could cause the market to weaken and trigger an additional sell-off.
But if shareholders and executives are more optimistic about the asset price, he can buy another Bitcoin with his DCA reserve capital (average dollar cost) in his position, increasing demand and pushing the price up.
A significant concern with institutional purchases, as with Square, is that it defeats the purpose of the decentralized nature inherent in Bitcoin by concentrating tokens in financial organizations. centralized. But for the massive adoption needed to truly cement BTC as a store of value, acquisitions such as those made by Square are useful and frankly necessary.
Bitcoin investors should carefully watch future Squar purchasese and the value of its total holdings to assess a possible market action.
Featured image from Unsplash