Square’s Cash App platform saw a surge in first-time Bitcoin buyers last month, CFO Amrita Ahuja told CNBC on Wednesday.
“We had 3 million people transacting Bitcoin through Cash App in 2020 and 1 million new to Bitcoin in January ”Said Ahuja on Squawk Alley just a day after Square announced it would buy more of the world’s largest cryptocurrency with cash on the fintech company’s balance sheet.
Cash App is Square’s peer-to-peer payments platform that also allows users to buy and sell assets like Bitcoin and stocks.
The surge in Bitcoin interest among Cash app users in January coincided with a sustained upward movement in digital coin over the past month. On January 1, Bitcoin was trading below $ 30,000 per unit. About a week later, it hit $ 40,000 apiece for the first time, though it lost most of its value in the second half of January.
Bitcoin topped $ 58,000 for an all-time high Sunday after taking its first trip above $ 50,000 last week. Even with solid gains on Wednesday, a big sell-off earlier this week brought Bitcoin under $ 50,000. However, Bitcoin is still up more than 70% since the start of the year and over 400% in the past 12 months.
Square began making it possible for almost everyone to buy and sell Bitcoin through its payment app in January 2018 after the rollout was more limited the previous fall. The first entry into the crypto market came when Bitcoin was in the midst of a major boom in 2017, hitting a record high of nearly $ 20,000 in December. In 2018 there was a big relapse in the so-called “crypto winter” when Bitcoin lost 80% of its value.
Bitcoin started a massive rally in 2020 when a number of high profile investors denounced the digital token as a strong hedge against inflation and moved in with established companies like PayPal.
Square itself bought $ 50 million worth of bitcoin in October with cash on its balance sheet. On Tuesday, the Jack Dorsey-led company announced it had purchased an additional $ 170 million worth of Bitcoin. Both bitcoin purchases account for about 5% of the company’s cash holdings, Ahuja told CNBC.
Square now owns a total of 8,027 bitcoins, valued at around $ 400 million as of Wednesday’s price. Dorsey, one of the most famous proponents of Bitcoin, once predicted that it would eventually become the Internet’s “single currency”. He also runs Twitter.
“We believe Bitcoin is in line with our goal of strengthening the economy,” said Ahuja, explaining Square’s investments. “Economic empowerment is about broadening access to financial instruments, even for people who haven’t had them. We believe Bitcoin is one way that could make this happen in the future.”
Crypto bulls have compared Bitcoin to “digital gold” and said that it can be a strong store of value as its supply is limited to 21 million units. According to Coindesk, there are currently around 18.64 million Bitcoins in circulation. New bitcoins are coming onto the market as a reward for so-called miners who use powerful computers to check transactions over the decentralized network.
Volatile trading was a hallmark of Bitcoin, and some cryptoskeptics point to this sizable volatility as a cause for concern when a company invests some of its balance sheet in the digital asset.
“We’re thinking about the long-term arc,” said Ahuja when asked about the volatility. “Overall, the investments we have made so far account for 5% of our cash, and the business that we connected to Bitcoin via the Cash app accounts for approximately 5% of our gross profit. We will continuously evaluate this investment. We We will be dynamic. We will react to the market environment, but ultimately we are investing in this long-term vision. “
Other companies that recently switched to crypto include Tesla, which announced earlier this month that it had bought $ 1.5 billion worth of Bitcoin. The Bank of New York Mellon, the oldest bank in the United States, announced on Feb.11 that it plans to set up a digital assets division later this year.
Square, which is up 195% over the past 12 months, fell 7.51% on Wednesday to $ 237.32 per share.