There are a number of ways to express your belief in cryptocurrency. One obvious method would be to buy Bitcoin (CCC:BTC-USD), but you can also own shares of Square (NYSE:SQ). We shouldn’t think of SQ stock as an exact proxy for crypto, but there’s a definite connection there.
As Square gears up to report its fourth-quarter earnings results on Feb. 23, there’s a lot for prospective and current investors to think about. Of course, the popular payment platform Cash App will be high on the list of considerations.
Yet, there’s more to the story than this. The recent ascension in the price of Bitcoin could weigh heavily in Square’s favor. After all, Square has been a cryptocurrency advocate for a while now.
Besides, Cash App and Bitcoin are now interconnected, so Square’s future success may be correlated to the mainstreaming of cryptocurrency. So, if you’re willing to take part in the revolution of digital payments, a position in SQ stock could be right for you.
SQ Stock at a Glance
What’s so great about SQ stock is that it’s not only a long-term investor’s dream stock, but it’s also a dip buyer’s delight.
That’s because every time SQ stock pulls back, the buyers step in and push the share price right back up. This has happened repeatedly over the past several months.
The short sellers have been roundly defeated since March of 2020 as SQ stock has catapulted from a 52-week low of $32.33 to a breathtaking high of $283.19.
And that high mark was reached very recently, with SQ stock trading above $275 as of Feb. 16. The next target for the bulls should be $325, and at the rate they’re going, it might not take very long to get there.
The Bitcoin-Cash App Connection
While the Cash App has been popular among young shoppers, not everybody appreciates how important the payment platform is within the cryptocurrency ecosystem.
Certified Financial Planner Matthew Frankel considers it “amazing” that that Square’s Cash App accounts for close to one-fourth of Bitcoin volume in the U.S.
I agree that this is highly impressive. This Bitcoin-Cash App connection suggests that many of the same folks who favor app-based payment methods will also tend to favor cryptocurrency.
Frankel evidently views this connection as a win-win for Square: “If being able to buy Bitcoin on Square has been driving user engagement of the Cash App, it’s very worthwhile.”
In other words, Bitcoin’s rising popularity should boost Cash App’s engagement, and vice versa.
Reasonable Confidence
During the third quarter, Square’s gross profits for Cash App more than tripled on a year-over-year basis. It’s entirely plausible that the aforementioned Bitcoin connection contributed to this result.
Also notably, Square’s total net revenues during the third quarter increased by 140% year-over-year. I can’t promise that Square will repeat these feats in the upcoming quarterly data release.
Still, we can be reasonably confident, as Bitcoin has proved extremely popular. Granted, much of that has to do with the recent increase in the Bitcoin price.
I also don’t want to give the impression that every one of the Cash App’s 30 million active users are Bitcoin fans. Without a doubt, some of them have never owned or used cryptocurrency.
That, however, leaves room for more Cash App users to learn about Bitcoin and perhaps start using it. Cash App could prove to be a gateway for Bitcoin newcomers.
Cash App is very user-friendly, so it’s a perfect entry point into the world of crypto. This is yet another reason why the Cash App is a serious threat to traditional banks.
SQ Stock: The Takeaway
It is undeniable that the bulls are still fully in charge of SQ stock. It’s a great stock for both short-term dip buyer and long-term investors.
And if you’re a fan of Bitcoin, then you should definitely check out SQ stock. Even if you’re not a crypto user yourself, you can still appreciate Square’s role in the digital payments revolution.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
