By Shelly Melancon (Switzerland)
After payment giants, Square announced on Tuesday that it had acquired almost 3,200 BTC in addition to its previous purchase, Bitcoin experienced a slight recovery on Wednesday.
Twitter Founder and CEO, Jack Dorsey, announced that the bird app had purchased more than $150 million Bitcoin worth $53,125 per BTC. This latest acquisition from Twitter makes their total investment in cryptocurrency to be $220M, having made some purchases previously.
Thus, it now has almost five percent of Square’s total cash reserves, cash equivalents, and marketable securities based on the financial information made available as of the last day of last year, 2020.
BTC/USD Rebounds
After square’s announcement, Bitcoin surged to an intraday peak of over $51K. But it made a slight adjustment before the start of the European session.
The cryptocurrency maintained its support levels close to its 20-day green wave, which further proves its recovery after consistent sell-offs in the past two days.
This price rebound hinges on the fact that more firms will most likely invest in cryptocurrency since institutional investors are doing the same. They might even be forced to make the investments as inflation continues to rise and the devaluation of the U.S. dollar continues unabated. Both of which are the results of the United States government’s bogus stimulus packages and the Federal Reserve’s method of lowering interest rates by implementing loosened monetary policies.
Can There Be an End in Sight to These BTC Liquidity Problems?
The answer is yes, according to Vijay Boyapati, one of Bitcoin’s long-term analysts. He said that only new buyers are preventing companies that have previously invested in the cryptocurrency from investing more in it since they continue to have less cash in reserve.
He said on Wednesday that “we need to keep in mind that MicroStrategy’s purchase and similar purchases should be expected to occur frequently. They are starting a trend of part of their future cash flow into Bitcoin. Consequently, prices will be higher as most of the tradeable supply will not be available.”
In his viewpoint about the present Bitcoin liquidity crisis, Ben Lilly, a crypto-financial analyst, remarked that the amount of Bitcoins that recent investors have purchased in the last few months is higher than the quantities of Bitcoin that miners have produced. He was referring to the purchases by Square, Grayscale, MicroStrategy, Tesla and similar companies. He further stated that most retail traders are only buying Bitcoins based on the BTC purchases of those prominent companies. The large volume of BTC withdrawals recently experienced in the exchanges is proof that traders are more willing to hold more than to trade less.
However, some of these traders are using Bitcoin as collateral by investing them into decentralized finance pools and earning profits in the process. In one of his recently published newsletters, Mr. Lilly remarked that Bitcoin continues to leave the exchanges in large volumes. Consequently, Bitcoin will continue to become less available to willing buyers. These actions will lead to increasing demand which supply will seriously struggle to meet up, and eventually insanely high prices.
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