What Happened: The bank’s market strategists said in a report that the Jack Dorsey-led company is likely to make more Bitcoin purchases, according to CoinDesk.
The analysts reportedly said that other payment companies are likely to follow Square’s lead or risk being left out of a growing segment.
The New York-based bank’s strategists described Square’s move as a “strong vote of confidence for the future of bitcoin.”
Square purchased 4,709 bitcoins on Oct. 7 at an aggregate purchase price of $50 million, which puts the price of each unit at roughly $10,618. That investment is worth $53.91 million as of press time.
Why It Matters: The lender’s researchers made a note of purchases of Bitcoin by millennials through Square’s Cash app as well as MicroStrategy Incorporated’s MSTR 0.23% $425 million purchase of the cryptocurrency, which they say is indicative of demand outstripping supply in the third quarter at a greater level than the preceding quarter, according to Coinbase.
The analysts reportedly said that options contracts to Bitcoin have risen as institutional clients are inclined to deal with established exchanges like the Chicago Mercantile Exchange. The analysts also ascribed the rise in options to retail investor activity.
The fintech company had termed Bitcoin as “an instrument of economic empowerment and provides a way to participate in a global monetary system.”
The company’s second-quarter earnings indicate that its Bitcoin revenue rose 600%, with Cash App leading growth.
Price Action: Bitcoin traded 0.53% lower at $11,488.89 at press time. Square shares closed nearly 2.9% higher at $190.47 on Monday and gained 0.28% in the after-hours session.