Block transitions to utilizing dollar cost averaging when investing in Bitcoin.
Block, the payments company headed by CEO Jack Dorsey, has initiated a dollar cost averaging (DCA) initiative to expand its Bitcoin holdings, according to a shareholder letter dated May 2.
Since April, the company has been allocating 10% of its monthly gross profit from Bitcoin-related products to purchase more Bitcoin. This strategy will continue until the end of 2024.
Dollar-cost averaging is an investment strategy that involves investing a fixed dollar amount into a particular asset at regular intervals, regardless of the asset’s price at the time. This method is commonly used to minimize the impact of price volatility.
Block’s move comes in response to the growing acceptance of Bitcoin as a mainstream investment option, exemplified by the Securities and Exchange Commission’s approval of multiple Bitcoin exchange-traded funds in January. This increasing recognition aligns with the company’s commitment to investing in Bitcoin.
“Our belief is that the world needs an open protocol for money, one that is not owned or controlled by any single entity… Our investment in Bitcoin goes beyond technology; it is an investment in a future where economic empowerment is the norm,” stated Jack Dorsey in the letter.
Despite the heightened focus on Bitcoin, Dorsey acknowledged that less than 3% of Block’s resources are currently allocated to Bitcoin-related projects. However, the company has revised its earnings expectations, projecting annual adjusted core earnings of at least $2.76 billion, up from the previous forecast of $2.63 billion.
Block’s shift towards a Bitcoin-centric portfolio is not new. The company made headlines in October 2020 when it purchased 4,709 BTC at an average price of $10,618 per Bitcoin. Subsequent investments in February 2021 included acquiring 3,318 BTC at a significantly higher price of $51,236 each.
As of March 31, 2024, Block reported owning 8,038 BTC valued at $573 million, with unrealized gains totaling $233 million.
However, despite these gains, Block’s shares have declined by 9% this year, with additional pressures arising from reports of federal prosecutors investigating the company’s internal compliance structures and its handling of transactions involving sanctioned countries.
Read more: Block, led by Jack Dorsey, lays off 10% of its workforce
