Bitcoin jumps as Square buys in

GURU WISDOM

“Never test the depth of the river with both of your feet.” - Warren Buffet
 

MARKETS

A new spark of life came into cryptocurrency markets after a period of relative calm. The price of Bitcoin jumped 5% to over 10,900 on the news that US payments company square had bought $50m worth of Bitcoin.

Wall Street continues to climb this week on hopes that US politicians are on the cusp of agreeing a new stimulus deal. The Dow Jones reached a one-month high, propelled by some of the more beaten down sectors including banks and energy. 

Shares in Europe too were higher in spite of record coronavirus cases in Paris which has put hospitals there in a state of emergency. Asian markets were also mostly higher with South Korea’s Kopsi getting a boost from Samsung Electronics announcing its quarterly profits likely rose 58%.

The price of oil jumped 3% following a sharp 2-day price slump in what has become a period of greater volatility owing to swift changes in short term supply. A surprise build in US inventories had sent prices tumbling but a growing worker strike in Norway is causing significant supply disruption, bringing the price back up again.

There was little movement in forex markets, which remained range bound following the release of ECB minutes. The most notable move was in the Turkish lira, which fell to a new record low over fears the US could sanction Turkey for using the missile defence system it purchased from Russia. Among the major pairs the biggest mover was USD/JPY where price rose to a 3-week high, helped by the risk-on mood in markets and less need for the yen as a haven.  
 

Bitcoin & Square

The price of Bitcoin is again testing the 11,000 level following news that Square, who’s CEO is Jack Dorsey – also the CEO of Twitter bought a large block of Bitcoin worth $50 million and 1% of the company’s assets. 

As a payments company, Square offers its users to buy Bitcoin through its Cash App. Not many large US corporations have taken a big stake in a cryptocurrency in this way- and it is creating some excitement that others may follow. Companies tend to keep their assets in different asset classes for diversification- and cryptocurrencies could soon be added to that list.