21.05.2024

Large companies took advantage of the fall in Bitcoin and bought cryptocurrency

Square has held another round of investments in Bitcoin. In its latest Q4 2020 earnings report, the firm revealed a purchase of roughly 3,318 BTC for a total of $ 170 million.

This is in addition to the 4,709 bitcoins that Square already acquired last October for $ 50 million. Together, Square spent roughly 5 percent of its free funds as of December 31, 2020 on these two investment stages . And she was not the only giant that replenished its cryptocurrency reserves the day before.

The issue of investing large companies in Bitcoin has become relevant again against the backdrop of a sinking in the rate of the cryptocurrency. Recall that on Sunday, BTC set another record rate of $ 58,640, after which it began to correct – that is, to decline. Since Monday, the value of the coin also dropped to 45 thousand dollars, which also affected the entire market.

For clarity, we present a graph of the Bitcoin exchange rate for the last week. The moment of the collapse is noticeable in the image – as well as the rebound in value.

bitcoin chart rate

Bitcoin price chart for a week

Note that not all investors began to panic and in a hurry to get rid of their asset. For example, MicroStrategy decided to buy bitcoins at a discounted price in order to get more profit after the cryptocurrency recovery. As it became known yesterday, the giant bought another portion of BTC for $ 1.026 billion.

According to CEO Michael Saylor, they acquired 19,452 BTC at an average rate of $ 52,765, bringing the total amount of bitcoins in the company’s possession to 90,531.

microstategy

MicroStrategy Office

The market responds well to MicroStrategy solutions. Here is a chart of the company’s stock value for the year. If before August 2020 – when the company invested in BTC and told about it – they were estimated at 110-120 dollars, now the cost is equal to 817 dollars. And this is after reaching a local peak of $ 1272 on February 9, 2021.

MicroStrategy promotions rate

MicroStrategy Stock Chart

Who Buys Bitcoins?

Square believes that cryptocurrency «is a tool for economic empowerment, empowering people to participate in the global monetary system and secure their own financial future.» Here is another quote from the company’s report cited by Decrypt.

The investment is part of Square’s ongoing commitment to Bitcoin. The company plans to maintain its total investment in the cryptocurrency market on an ongoing basis along with other assets under management.

That is, the company’s management perceives cryptocurrency on an equal footing with other assets in which they invest. Accordingly, they do not consider blockchain coins too risky, and volatility – or sudden changes in the value of a cryptocurrency – is bad.

And this is a new approach that goes against criticism of Bitcoin and other similar assets. For example, just yesterday we learned about the comments of Bill Gates about the cryptocurrency. He used his popularity to warn cryptocurrency investors and once again voice doubts about the future of BTC.

Jack Dorsey Twitter

By the way, one of the founders of Squre is the head of Twitter Jack Dorsey, who also actively supports cryptocurrencies.

The company also reported $ 4.57 billion in revenue from its own Cash App for 2020, nine times its 2019 level. $ 1.76 billion of that revenue came in the fourth quarter alone, up 1,000 percent from the fourth quarter of 2019. The rise is simple to explain: over the aforementioned time periods, the price of BTC has risen from $ 10,500 to $ 28,600 .

According to Square, the revenue growth has been fueled by a large influx of newly minted crypto investors. Here is a quote from a company representative.

In the fourth quarter of 2020, the volume of bitcoin turnover per client increased by more than 2.5 times compared to the previous year. This was mainly due to buying activity as existing customers continued to buy cryptocurrency, and new users contributed to an even greater inflow of investments.

That is, analysts point to an increase in interest in cryptocurrencies on the part of platform users. Taking into account the similar behavior of the course, this is not surprising.

We believe that the actions of large companies are positive for the cryptocurrency market. Now Bitcoin has dropped in price and caused panic among many investors. However, despite the collapse, the already mentioned representatives of MicroStrategy not only did not get rid of the asset, but also increased its volumes at their disposal. This means that when the niche goes up again, they will receive the maximum possible profit.

Obviously, such actions of the giants should not only reassure, but also serve as an example. Still, going against the crowd and buying when others are selling is difficult. However, this is why brave investors are rewarded for such actions.

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