First Mover: Bitcoin Hits $11K as Square Exposes $2.3T Corporate Money Pot

Oct 9, 2020 at 12:39 UTCUpdated Oct 9, 2020 at 14:51 UTC.Payments company Square's announcement that it would put some $50 million, or 1% of its assets, into bitcoin has touched off speculation that more corporations might do the same.

Jack Dorsey, the Twitter CEO who also helms Square, is a longtime bitcoin bull, so it wasn't a huge surprise his company would put some of its corporate liquidity into the cryptocurrency.

He's following the path of MicroStrategy CEO Michael Saylor, who has invested at least $425 million of the company's assets in bitcoin.

"It's a bit surreal to see gigantic corporate entities now going knee-deep in bitcoin," Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote to subscribers on Thursday.

So a 1% across-the-board allocation to bitcoin would amount to $23 billion of purchases.

A big bullish investment thesis for bitcoin is that large institutional investors are on the verge of diving into cryptocurrencies as an asset class, led by money managers like Fidelity Investments that have embraced the new technology and digital-asset markets.

Dorsey tweeted out a "White paper" to his 4.7 million followers explaining just how Square had come to buy its bitcoin - noting that the transparency was intended "So others can do the same."

"To maintain transaction privacy and price slippage on execution, treasury purchased the bitcoin over-the-counter with a bitcoin liquidity provider that we currently use as part of Cash App's bitcoin trading product," according to the whitepaper.

"We negotiated a spread on top of a public bitcoin index and executed trades using a time-weighted average price over a predetermined 24-hour period with low expected price volatility and high market liquidity, in order to reduce risks associated with cost and pricing."

Bitcoin has jumped over 3% in the past 24 hours to set a three-week high above $11,000.