Bitcoin Strongly Rebounds! In addition to the support from Square, the U.S. restarts economic stimulus negotiations, playing a crucial role.

Square and MicroStrategy, two publicly traded companies, buying into Bitcoin may just be the tip of the iceberg, as there could be many more companies accumulating Bitcoin that have yet to surface. On the other hand, the news of the U.S. announcing the restart of economic stimulus measures has become a major driving force behind the recent surge in Bitcoin prices.

Square's Faith in Value Addition

Two days ago, Jack Dorsey's payment company Square announced the purchase of $50 million worth of Bitcoin, igniting the cryptocurrency market. This marks the second public company to add Bitcoin to its investment portfolio after Microstrategy announced a $400 million purchase of Bitcoin.

Square has been offering cryptocurrency payment services since as early as 2014 and introduced Bitcoin trading on its popular Cash App in 2018. Reports indicate that Bitcoin revenue grew by 367% in the first quarter of this year. CEO Jack Dorsey has long been an advocate for Bitcoin and its decentralized principles, even stating that "Bitcoin could become the world's only currency by 2030."

Recently, Bitcoin's price has been hovering between $10,000 and $11,000. However, following this news, it surged above $11,000, potentially signaling the start of the next bull market for Bitcoin and the cryptocurrency market.

Square and MicroStrategy Just the Tip of the Iceberg

It raises the question of whether more companies will follow suit in announcing Bitcoin purchases. Renowned data analyst Willy Woo recently indicated in a tweet that Square and Microstrategy are not the only companies accumulating Bitcoin currently, suggesting that there may be many others yet to be revealed. He stated:

"Square bought 4,709 BTC, Microstrategy bought 38,250 BTC, but this is just the tip of the iceberg. Over the past 8 months, exchange inventories have decreased by 250,000 BTC, indicating that many other 'unannounced' investors have been accumulating a significant amount of chips in the market."

Square's buy of 4,709 BTC and Microstrategy's 38,250 BTC is the tip of the iceberg. The last 8 months has seen a reduction of 250,000 BTC in the speculative stockpile sitting on exchanges signalling many other *unannounced* investors have been scooping coins off the market. https://t.co/OwsQvvG2eS

— Willy Woo (@woonomic) October 9, 2020

Interestingly, following the announcements of Square and Microstrategy purchasing Bitcoin, their stock prices rose. This suggests that "using assets to buy Bitcoin is a positive factor for the stock prices of public companies, rather than a negative one," providing some assistance in determining the fair value of Bitcoin.

Trump Restarting Economic Stimulus Negotiations

As Bitcoin's price continues to climb, apart from public companies making significant purchases, the revival of hope in the U.S. economic stimulus bill has played a crucial role. On October 7th, President Trump instructed White House officials to halt negotiations on further COVID-19 stimulus packages, causing a sharp drop in the U.S. stock market towards the closing bell. Cryptocurrencies, as investment assets, also tumbled alongside the global market. However, according to a report by The Wall Street Journal on the 9th, Trump has resumed negotiations and plans to offer $1.8 trillion, leading to a significant rebound in both the U.S. stock market and the cryptocurrency market.

With more traditional financial investors entering the scene, the correlation between Bitcoin and the stock market is becoming increasingly apparent. At present, these high-risk assets react strongly to the U.S. decisions on economic stimulus bills. Additionally, the upcoming U.S. presidential election will also impact the direction of the cryptocurrency market.