As a researcher with a background in finance and experience in following the technology sector, I find Block’s decision to implement a dollar-cost averaging (DCA) strategy for purchasing Bitcoin an intriguing move. The company’s commitment to investing in Bitcoin, as expressed by CEO Jack Dorsey, aligns with the growing mainstream recognition of Bitcoin as a legitimate investment option.
As a crypto investor, I’m excited to learn that Block, the payments company I follow closely, under the leadership of Jack Dorsey, is implementing a dollar cost averaging (DCA) strategy to increase its Bitcoin holdings. According to the May 2 shareholder letter, this approach will help us systematically buy Bitcoin over time, which could potentially yield better long-term results.
From the start of April, the firm has earmarked a tenth of its monthly Bitcoin product earnings as a budget to buy more Bitcoin. This practice is planned to persist until the end of 2024.
Dollar-cost averaging refers to a investment technique where a set amount of dollars is consistently put into a specific asset, regardless of its current price. This approach is popularly employed to lessen the impact of market fluctuations on investments.
Block, Inc.’s decision aligns with the rising mainstream popularity of Bitcoin as a viable investment choice, underscored by the Securities and Exchange Commission’s green light for several Bitcoin ETFs in January. This burgeoning acceptance echoes Block’s dedication to investing in Bitcoin.
“We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity…Our investment in Bitcoin transcends technology; it is an investment in a future where economic empowerment is the norm.” Jack Dorsey said in the note.
Although Bitcoin has gained more attention, Dorsey revealed that only around 3% of Block’s resources are allocated to Bitcoin-related initiatives at present. However, the company has revised its earnings projections, predicting a minimum annual adjusted core income of $2.76 billion, which is an improvement from the earlier estimated $2.63 billion.
Block’s transition towards focusing on Bitcoin wasn’t a recent development. Back in October 2020, the company gained attention by acquiring 4,709 Bitcoins for approximately $50 million.
In February 2021, we bought an extra 3,318 Bitcoins for a much higher cost of $51,236 per Bitcoin.
On March 31, 2024, Block’s holdings included 8,038 Bitcoin worth approximately $573 million, representing a paper profit of around $233 million.
Despite the advancements made by Block this year, its shares have dropped by 9%. Moreover, there are extra stressors as investigations by federal authorities into the company’s internal controls and dealings with restricted nations have surfaced.
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2024-05-03 12:12