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Bitcoin rebounds after Square, MicroStrategy purchases

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Bitcoin climbed back above the $50,000 mark Wednesday after getting another vote of confidence from major companies not named Tesla.

The world’s biggest cryptocurrency recovered from its steep Tuesday plunge to trade up 4.1 percent at $50,710.12 as of 8:11 a.m. after climbing as high as $51,445.67 overnight, according to CoinDesk data.

The bounce came after digital payments firm Square announced that it bought some 3,318 bitcoins for a total of $170 million, adding to a $50 million purchase it made last year.

The Cash App owner — led by Twitter CEO and crypto fan Jack Dorsey — said its bitcoin investment now represents about 5 percent of its corporate cash, cash equivalents and marketable securities.

Business intelligence firm MicroStrategy — an early corporate backer of bitcoin — also announced Wednesday that it had bought more than $1 billion worth of the digital currency, bringing its total bitcoin investment to about $2.2 billion.

The firms doubled down on their bitcoin bets despite the cryptocurrency’s wild volatility, which some experts think will keep other big companies away from the burgeoning crypto market.

The Cash App owner — led by Twitter CEO and crypto fan Jack Dorsey — said its bitcoin investment now represents about 5 percent of its corporate cash.
The Cash App owner — led by Twitter CEO and crypto fan Jack Dorsey — said its bitcoin investment now represents about 5 percent of its corporate cash.
Michael Reynolds/Pool Photo via AP, File

“We believe the internet needs a native currency, and we believe bitcoin is it,” Dorsey said on the company’s earnings call Tuesday.

Dorsey added that more than three million Cash App customers bought or sold bitcoin last year and more than a million purchased it for the first time in January alone.

But Wall Street isn’t so convinced. Square’s stock price fell about 2.6 percent to $250.01 in premarket trading Wednesday after it revealed the bitcoin buy alongside a fourth-quarter earnings report that beat expectations for adjusted profits but missed estimates for revenues.

Square’s announcement came about two weeks after Tesla revealed it had bought $1.5 billion in bitcoin, which added fuel to the coin’s staggering rally.

But major cryptocurrencies tanked Tuesday after Tesla chief Elon Musk said he thought the prices of bitcoin and Ether, the second-largest coin by market value, “seem high.” The tumble also followed a warning from Treasury Secretary Janet Yellen that bitcoin was “extremely inefficient” and “highly speculative.”

Bitcoin’s value has still surged about 73 percent this year despite falling from its all-time high of $58,332.36, CoinDesk data show. It’s gotten a boost from increased interest among institutional investors as well as large companies’ growing support for cryptocurrency.

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