The Cash App Square platform saw an increase in bitcoin buyers for the first time last month, CFO Amrita Ahuja told CNBC on Wednesday.
“We had 3 million people trading in bitcoin through the Cash App in 2020 and 1 million who were new to bitcoin in January [2021]Ahuja said on “Squawk Alley” just a day after her company announced it had bought more of the world’s largest cryptocurrency with cash on its fintech balance sheet.
Cash App is Square’s peer-to-peer payment platform that allows users to buy and sell assets such as bitcoin and stocks.
The January rise in bitcoin interest among Cash app users coincided with a steady move to grow digital currency last month. On January 1, Bitcoin traded below $ 30,000 per unit. It reached $ 40,000 a piece for the first time about a week later, although it largely returned in value in the second half of January.
Bitcoin surpassed $ 58,000 for an all-time high on Sunday, after making its first trip over $ 50,000 last week. Even with solid gains on Wednesday, a big sale earlier this week took bitcoin below $ 50,000. However, Bitcoin is still growing by over 70% over the current year and by over 400% in the last 12 months.
Square began allowing almost all users to buy and sell bitcoin through its payment app in January 2018, following a more limited launch last fall. Its initial entry into the cryptocurrency market came as Bitcoin was in the midst of major growth in 2017, reaching what was then a record high of nearly $ 20,000 in December. Then came a major skid throughout 2018 in what became known as the “cryptographic winter,” when bitcoin lost 80% of its value.
But in 2020, Bitcoin began a massive rally, while a number of profile investors promoted the digital symbol as a strong inflation hedge and established companies such as PayPal moved.
Square itself bought $ 50 million worth of bitcoin in October using cash on its balance sheet. On Tuesday, the company led by Jack Dorsey announced that it had bought a bitcoin in addition to 170 million dollars. Both bitcoin acquisitions amount to about 5% of the company’s cash holdings, Ahuja told CNBC.
Square’s bitcoin holdings – 8,027 coins in total – were worth about $ 400 million based on Wednesday’s price. Dorsey, one of bitcoin’s best-known supporters, once predicted that it would eventually become the “single currency” of the Internet. He also runs Twitter.
“We believe that bitcoin is aligned with our goal, which is economic empowerment,” Ahuja said, explaining Square’s investments. “Empowerment is about bringing access to financial instruments wider, including for people who haven’t had it before. We believe that bitcoin is a way that could allow this for the future.”
Bulls Crypto compared bitcoin to “digital gold”, saying that because its offer is capped at 21 million units, it can be a strong store of value. There are currently about 18.64 million bitcoins in circulation, according to Coindesk. The new bitcoins are coming to market as a reward for so-called miners, who use high-power computers to verify transactions in the decentralized network.
Volatile trading has been a hallmark of bitcoin, and some crypto skeptics point to those considerable fluctuations as a cause for concern when a company invests its balance sheet cash in digital assets.
“We’re thinking about the long-term arc,” Ahuja said when asked about volatility. “In general, the investment we have made so far represents 5% of our cash, and the business we have linked to bitcoin through the Cash App represents about 5% of our gross profit. We will evaluate this investment continuously. We will be dynamic. We will respond to the market environment, but ultimately that long-term vision is where we invest. “
Other companies that have recently moved into crypto include Tesla, which earlier this month announced it had bought $ 1.5 billion worth of bitcoin. Bank of New York Mellon, the oldest bank in the United States, said on February 11 that it plans to launch a digital assets division later this year.
Square, which has risen more than 200 percent in the past 12 months, fell more than 6 percent on Wednesday to about $ 240 a share.