If the price of bitcoin were to surge to $100,000 this year, the price Square could make through cryptocurrency transactions on its Cash App could surge to $1 million, according to Wall Street analysts at Mizuho Securities.
According to Business Insider, in a note sent to clients the analysts wrote that if by the end of this year BTC’s price hits $10,000 the firm’s profits tied to its crypto transactions “could drive a 9x increase in Bitcoin GP [gross profit] to slightly over $1 billion.”
According to Mizuho, Square made an estimated $110 million in gross profits associated with bitcoin last year. The firm, it’s worth noting, has rolled out BTC purchases to its users back in December 2017, when the cryptocurrency was trading at around $12,000.
CryptoCompare data shows that in 2017 the price of BTC hit a high close to the $20,000 mark that was only surpassed late last year. Since that high was broken BTC has been surging, and is now trading above $41,400. The $40,000 mark, it’s worth noting, was breached earlier today.
Mizuho’s analysts added, however, that even if the price of bitcoin starts to drop, Square could still see its profits increase thanks to BTC trading activity on its Cash App. Back in Q3 2019 and Q1 2020, they said, the average price of BTC fell from $10,400 to $8,300, but overall gross profit for Square tied to it tripled from $2.1 million to $6.7 million.
As such, even if BTC drops to $35,000 by the end of the year, Mizuho believes Square could see its BTC gross profits quadruple to $400 million. Square has, as reported, invested $50 million in BTC late last year, adding the cryptocurrency to its treasury reserves. The BTC Square holds, according to a website tracking the investment, is now worth $195 million.
Featured image via Pixabay.