Mizuho’s fintech analyst, Dan Dolev estimates that gross profits of Square’s Cash App could increase up to 9x if bitcoin reaches $100,000 by year-end and could double if bitcoin falls to $10,000.
In a CNBC interview, he said their findings since 2017 is that, “The revenue from Bitcoin for Square continues to go up even in periods where Bitcoin actually doesn’t go up,”.
According to Dolev, even in periods where Bitcoin was going down, the gross profit from bitcoin has been going up and the reason for that is a twofold one. “There are more users actually using or trading Bitcoin on the Cash App and two, the number of transactions per user is going up.”.
“If Bitcoin reaches a hundred thousand by year-end, this could drive 9 times growth in Cash App’s gross profit and if Bitcoin drops to ten thousand, its gross profit may still double, helped by the growing user base and higher engagement,”. Dolev said, Square will still benefit either if Bitcoin flies high or dive low. But he warned that it would not be good for the engagement on the Cash App if Bitcoin stays at a certain price and does not move.
Square Inc. (NYSE: SQ) is a company that offers financial and merchant services. It owns the peer-to-peer(P2P) mobile payment service, Cash App.
Dolev stated that they are seeing the exact same trends of Square on PayPal and the only difference between them is that PayPal offered earlier in November and nearly 20% of the user base has already started trading, so we could expect a bigger number by now. Meanwhile, Square’s offering is much more broad-based which according to Dolev means, the engagement on the Cash App has much more meaning to other products that are in the PayPal App.
As for the trader Guy Adami, he picks ‘PayPal over Square’ because the chart of Square Inc. currently manifests a short-term double top pattern which is a bearish pattern in technical analysis. The opposite is true for SAM’s founder, Tim Seymour as he said, “I hate the price, I hate the valuation.. Square clearly doesn’t only have an ecosystem but a very loyal following and their ability to monetize this group has been proven,”.