Bitcoin surges back above $51,000 as Jack Dorsey's Square invests $170 mn

New York: Bitcoin rebounded on Wednesday, climbing back above the $50,000-level after a sharp selloff to start the week.

The world's largest cryptocurrency by market capitalization jumped Wednesday on news that payment firm Square purchased an additional $170 million worth of bitcoin, as well as Ark Investment Management CEO Cathie Wood's bullish comment on the digital token.

Bitcoin around 4AM ET on Wednesday jumped 7.5% to a price of $50,683, according to data from Coin Metrics. It edged even higher to $51,369 hours earlier. Other cryptocurrencies from ether to XRP were also up early on Wednesday.

As of 8:42AM ET, bitcoin was trading higher by 1.47%, to $49,536.87.

Bitcoin plunged on Monday and Tuesday, tumbling to as low as $45,000. But bitcoin advocates such as Wood told Bloomberg Radio that she remains bullish on the digital asset.

"We're very positive on bitcoin," she said, adding she was "very happy to see a healthy correction here. No market is straight up. Everyone should know that."

Meanwhile, Square during its earnings call on Tuesday announced that it purchased 3,318 bitcoins at an aggregate purchase price of $170 million. Bitcoin now represents about 5% of the company's total cash, cash equivalents, and marketable securities as of the end of last year. Square in October 2020 purchased 4,709 bitcoins for $50 million.

"The investment is part of Square's ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis," the company said. Like Wood, bitcoin bulls remain unfazed by the cryptocurrency's price fluctuations.

"We may be seeing some price fluctuations that can be expected in a nascent space," Paolo Ardoino, Bitfinex CTO, told Insider. "Such criticism misses the point and the profound impact it is starting to have. For many of the battle-tested exchanges that have weathered the market fluctuations, volatility isn't new and is to be expected in such a young market."