Square’s Cash app, which facilitates payments among friends, recently gave some of its users the ability to buy and sell bitcoin, in a move that according to Sarah Friar, the company’s CFO and operations lead, was about Square’s innovation, not bitcoin’s validation, as the company listens carefully to its customers when new products are launched.
Square, which recently surpassed Venmo as one of the most downloaded financial apps due to its ease-of-use, saw its shares jump more than 4 percent when the move was discovered, as it signals bitcoin trading for mainstream traders. The app, however, currently doesn’t allow users to transact in the cryptocurrency, only buy, sell, and hodl it.
As reported by CCN the company’s CEO, Jack Dorsey, gave an interview with The Verge in which he recalled being asked by numerous people how to buy bitcoin, and stated that bitcoin could be especially popular with younger people using smartphones to make payments.
At the time, Credit Suisse analysts noted that the company is will positioned to allow cryptocurrency transactions at point of sale. According to CNBC, the institutions recently elaborated its comments, adding that Square can add millions in annual revenue by supporting the cryptocurrency.
Credit Suisse analyst Paul Chondra notably wrote that it may even prompt adoption by its competitors, citing PayPal as an example:
“While we are positive on Square’s strategy, to the extent it confers legitimacy on Bitcoin and prompts adoption by other providers (i.e., PayPal) the biggest beneficiary may be the crypto-asset industry,”
According to Credit Suisse’s estimates, Square can add 10 million bitcoin buyers over two years, taking Coinbase’s growth into account, which would drive its revenue up by $30 million. Furthermore, Chondra said the company may charge a 1.5 percent fee per transaction, and estimated that the average customer could spend about $200 a year in bitcoin.
At the end of his analysis, Chondra reiterated his neutral rating, but increased his price target for Square’s shares, from $31 to $37. At press time, Square’s shares were trading at $48.81, following a surge partly triggered by Chondra’s analysis and its bitcoin play.
On the other hand, bitcoin recently hit a new all-time high above $8,000 and some speculate it may soon reach $9,000. The cryptocurrency is currently trading at $8,188.16, according to data from CoinMarketCap. Notably, despite Chondra’s positive take on Square’s bitcoin move, Credit Suisse’s CEO, Tidjane Thiam, recently stated the cryptocurrency is the “very definition of a bubble.”