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Breaking Down Square’s Bitcoin (BTC) Position

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The recent push to the $1 trillion bitcoin market cap can at least be partially attributed to institutional investors; firms investing on the behalf of others or as part of their asset allocation strategies.

Square, One of the Largest Corporate Holders of Bitcoin

Alongside MicroStrategy, now Tesla, Square is one of the largest institutional purchasers of the asset. However, unlike these other two companies – Square purchases bitcoin to provide it to its users directly through its app. A potential signal on the strong retail interest behind bitcoin, a driving force behind Bitcoin’s rally to $57K.

The CEO of Square, the publicly traded financial payments company, aiming to disrupt traditional finance, Jack Dorsey, is a staunch supporter of bitcoin. 

Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose”

In January, one million users bought bitcoin for the first time last month through Square’s Cash App, with 24 million monthly users on Cash App, this is still a 23 million user untapped source of investors for Bitcoin.

Possibly to capitalize upon this and expand its Bitcoin revenues, in its fourth quarter release  Square announced another $170 million purchase of BTC.

Square is estimated to have paid $51,000 per BTC  based on its timing in Q4. Bitcoin is currently at $44,800 at the time of writing, meaning that their position is down ~12% since the time of purchase. However, Jack Dorsey and the Square leadership indicate no signs of wanting to sell their large 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 leadership came under pressure from its other institutional shareholders to sell the asset if it declined dramatically in price due to volatility, this event may cause a weakening in the market and trigger a further sell-off.

But if shareholders and leadership are more optimistic about the asset’s price, it may buy other Bitcoin with its reserve capital to DCA (dollar cost average) into its position, increasing demand and pushing the price up.

A significant concern with institutional purchasing, such as with Square, is that it defeats the purpose of Bitcoin’s inherent decentralized nature by concentrating tokens into centralized financial organizations. But for the mass adoption needed to truly cement BTC as a store of value, acquisitions such as these done by Square are helpful and frankly necessary.

Bitcoin investors should keep a careful watch on the future purchases of Square and the value of its total holdings to gauge possible market action.

Featured Image from Unsplash





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Turkish crypto exchange halts trading amid reports of police raid

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Major Turkish cryptocurrency exchange Thodex has abruptly halted trading and withdrawals amid reports of police raids, Cointelegraph Turkey reported on Thursday.

Thodex posted an official announcement on Twitter on Thursday, informing users that it has halted transactions for a period of four to five days. According to a statement, the platform stopped trading and withdrawals due to a purported partnership with “world-renowned banks and funding companies” to improve its services.

Thodex said that its clients should not be worried about their investments, stating that “users will be informed regularly” during the suspension period. The exchange had previously announced a six-hour-long maintenance break on Tuesday.

The abrupt suspension of trading and withdrawals has concerned the crypto community, as the exchange has gone radio silent since announcing the interruption.

Local publications speculated that the suspension could be part of an exit scam amid reports that the company’s founder, Faruk Fatih Özer, has fled to Thailand with $2 billion worth of crypto. The founder allegedly left Istanbul Airport on Tuesday, while local authorities have launched a criminal investigation against the firm and raided Thodex’s offices.

Thodex did not respond to Cointelegraph’s requests for comment.

The news comes amid a new wave of concern over the Turkish government’s stance on cryptocurrency regulation. The country’s central bank officially announced a ban on crypto payments effective as of April 30. 

Additional reporting by Erhan Kahraman and Ayse Karaman.