JPMorgan Calls Square's $50M Bitcoin Investment 'Strong Vote of Confidence' for the Cryptocurrency

Other payment companies will also likely follow in Square's footsteps or risk getting shut out of a growing segment, JPMorgan wrote.

AccessTimeIconOct 14, 2020 at 1:51 a.m. UTC
Updated Sep 14, 2021 at 10:09 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Square's recently announced $50 million investment in bitcoin (BTC) is a "strong vote of confidence for the future of bitcoin" and a signal the payments company sees "a lot of potential" for the cryptocurrency as an asset, JPMorgan analysts said in a report dated Tuesday.

  • While Square's $50 million investment pales next to MicroStrategy's recent $425 million loading up of the cryptocurrency, JPMorgan's global market strategists wrote that Square is likely to make more purchases.
  • Other payment companies will also likely follow in Square's footsteps or risk getting shut out of a growing segment, the JPMorgan analysts wrote.
  • Millennials have been using Square's Cash App to buy BTC, the researchers noted, and that demand, along with MicroStrategy's purchases, indicate Q3's bitcoin demand exceeded supply at a greater level than Q2's.
  • While noting that options contracts to BTC have risen due to how institutional clients prefer to deal with established exchanges like the CME, the JPMorgan strategists said it's likely retail traffic is driving the surge in options.
  • Square's investment is a strong vote of confidence for the long term because the September sell-off in BTC only partly alleviated what the JPMorgan team described as overbought conditions created during late July/early August. However, an overhang of net long positions could create a headwind for the price of BTC in the near term, the analysts said.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.