Square is one of the largest fintech companies in the world with a market capitalization of $26 billion. The company was founded by Jack Dorsey, who is the current CEO of Twitter. It provides payment processing services to online companies around the world.
In the past year, Square’ stock has gone up by more than 170% after the company announced its decision to accept cryptocurrencies. Yesterday, its stock jumped by 3% after the company received a bitcoin license to operate a platform to trade cryptocurrencies in New York. Already, the app has more than 7 million active users.
After the news was released, the price of bitcoin jumped by more than 4% to an intraday high of $6720, the highest level since Tuesday last week. Traders believe that the new license will make it easy for millions of New Yorkers to buy and sell bitcoin – and other cryptocurrencies. They anticipate more demand from one of the wealthiest cities in the world.
However, traders should be cautious. In the past, imagined demand has never materialized. For example, when bitcoin futures started trading in CME and CBOE, many traders thought that increased demand from institutional investors would lead to higher prices. Sadly, the opposite happened as these institutions took short positions leading the price to fall by more than 50% this year.
Last week, the BTC/USD pair fell after a South Korean exchange was hacked. The pair fell from $7450 to an intraweek low of $6050. In the past few days, the pair has traded within a narrow range as the market figures out what’s next. The pair is trading above the 25-day moving average, and slightly lower than the 50-day moving average. Its RSI is currently at 53 and moving up. In the coming days, the price could move up as it tries to recover from the losses. Alternatively, it could continue the downward trend as markets wait for major positive news which could propel it higher.
