Sign in Subscribe
Featured

Square’s Bitcoin news was bigger than it looked

The importance for Bitcoin price sentiment was underscored by a spike in trading volume. The jump ought to be regarded as just as unequivocal as the price move. There was strong corroboration from CF Benchmarks’ regulated volume data.

CF Benchmarks

• 3 min read
Square’s Bitcoin news was bigger than it looked

Square’s $50m BTC investment was followed by a significant surge in verified volume

$11,000 and chill

Bitcoin sentiment remains fair at the start of the week after definitive strides the week before saw price indisputably trade back above $11,000 for only the second clear occasion since August’s correction.

Still, price progress has continued in its weeks-long vein of slow and steady, undermining the significance of recent major industry news like Square Inc.’s $50m investment.

CF Benchmarks’ regulated CME CF Bitcoin Reference Rate topped out for the year so far at $12,165.74 on 17th August. It then based at 10,048.42 on 7th September.

XBT-USD then hovered at just over $10,000 till early October. As such, the advance to $11k—a round number that technical chart watchers regard as ‘psychological’—has enhanced market significance.

To be sure, the recovery of crypto sentiment over the last month or so can be attributed to several external factors. BTC can no longer be credibly seen as a ‘decorrelated’ asset. S&P 500’s chunky rally since 23rd September is a clear enough corollary. That said, the effect of recent Bitcoin-specific news can’t be discounted.

MicroStrategy’s mega investment
Outside of specialised circles it’s fair to say that business intelligence firm MicroStrategy was fairly obscure till a couple months ago. It made its name in August after filing the biggest direct investment in Bitcoin by a U.S.-listed firm. An initial $250m purchase equated to some 25% of the firm’s total market value. The group went on to reveal in the weeks that followed that it had expanded its BTC holding to $425m.

Square time for Bitcoin
Even so, it’s possible that Square’s acquisition of $50m worth of Bitcoin, revealed last week, eclipsed MicroStrategy’s in terms of importance.

Clearly, having a Silicon Valley notable like Dorsey—a known Bitcoin enthusiast—attached, helped power hyperactive crypto sentiment to the upside.

Square tweeted news of its purchase at 13:05 UTC on 8th October. As the chart of our Bitcoin Real Time Rate for the hours that followed shows, prices were buoyed in the wake of the announcement.

CME CF Bitcoin Real Time Rate – 13.00 – 17.59 UTC, 08-10-2020 BRR-REACTION-TO-SQUARE-NEWS
Source: CF Benchmarks

And though Square’s buy was more modest in absolute terms than MicroStrategy’s, with Square purchasing 4,709 Bitcoins, or some 1% of its total assets by end Q2, the significance and commitment behind the outlay was just as weighty.

Volumes pumped
Either way, the importance for Bitcoin price sentiment was underscored by a spike in trading volume. The jump ought to be regarded as just as unequivocal as the price move. There was strong corroboration from CF Benchmarks’ regulated volume data. By definition, all data must cross stringent controls before admission to our indices. 1. Price data are sourced from a regularly-reviewed cohort of bona fide exchanges. 2. These venues must meet strict criteria on each review. With CF Benchmarks’ real-time Bitcoin volume surging by a multiple of more than 2.5 times the 90-day average, there’s little doubt the market saw Square’s move as hyper-bullish.

Bitcoin-USD volume from CME CF BRTI constituent exchanges 12-00 UTC – 19.00 UTC, 08-10-2020CME-CF-BRTI-VOLUME-REACTION-TO-SQUARE
Source: CF Benchmarks

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell any of the underlying instruments cited including but not limited to cryptoassets, financial instruments or any instruments that reference any index provided by CF Benchmarks Ltd. This communication is not intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. Please contact your financial adviser or professional before making an investment decision.

CF Benchmarks Ltd (“CF Benchmarks”), a company registered in England and Wales with company number 11654816 and authorised and regulated by the Financial Conduct Authority. Information about us can be found on the Financial Services Register (register number 847100).

Registered Office: 6th Floor One London Wall, London, United Kingdom, EC2Y 5EB.

You agree not to, and have no rights to, use the CF Benchmarks Data to create, calculate, issue, settle, maintain, support or develop any financial instruments (including but, without limitation exchange traded products, certificates, warrants, contracts for difference, swaps, binary options, structured products), indices, products, services (including but without limitation, portfolio management services, pre- and post-trade risk management services, or valuation services) or any other derivative works without the express written consent of CF Benchmarrks.

You agree not to analyze, reverse-engineer or disassemble any CF Benchmarks data and not to insert any code or product to manipulate the Website content in any way that affects any user’s experience. Unless CF Benchmarks gives you prior written permission, use of any Web browsers (other than generally available third-party browsers), engines, scripts, software, spiders, robots, avatars, agents, tools or other devices or mechanisms (such as crawlers, browser plug-ins and add-ons, or other technology) to navigate, access, copy in bulk, retrieve, harvest, index, search or analyse any portion of the Website is strictly prohibited.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of CF Benchmarks Ltd. Use and distribution of the CF Benchmarks data requires a license from CF Benchmarks or its authorized licensing agents.

All information is provided for information purposes only. All information and data contained on this website is obtained by CF Benchmarks, from sources believed by it to be accurate and reliable. Such information and data is provided "as is" without warranty of any kind.

CF Benchmarks, nor its directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or implied, either as to the accuracy, timeliness, completeness or merchantability of any information or of results to be obtained from the use of the CF Benchmarks indices or the fitness or suitability of the same indices for any particular purpose to which they might be put. Any representation of historical data accessible through CF Benchmarks indices is provided for information purposes only and is not a reliable indicator of future performance.

No responsibility or liability can be accepted by CF Benchmarks nor their respective directors, officers, employees, partners or licensors for any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this website or links to this website.

CF Benchmarks and its respective directors, officers, employees, partners or licensors do not provide investment advice and nothing accessible through CF Benchmarks, should be taken as constituting financial or investment advice or a financial promotion. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of any assets.

CF Benchmarks is a member of the Crypto Facilities group of companies which is in turn a member of the Payward, Inc. group of companies. Payward, Inc. is the owner and operator of the Kraken Exchange, a venue that facilitates the trading of cryptocurrencies. The Kraken Exchange is a source of input data for certain CF Benchmarks indices. Payward, Inc. is the owner and operator of the Staked, a venue that operates the block production nodes for decentralized PoS protocols on behalf of institutional investors. Staked.us is a source of input data for certain CF Benchmarks indices.

Please refer to the individual product family documentation for more information about applicable input data sources.