Block Inc. – the parent company of Square – is a company run by former Twitter CEO Jack Dorsey. As a payment processor, the company has been focusing heavily on bitcoin in recent years given how much Dorsey has become a fan of the world’s number one digital currency by market cap. However, according to analyst Dan Dolev who works with Block, the firm is suffering heavily due to this newfound love of BTC, and he says it could ultimately be brought down from its present high-ranking position if it doesn’t control itself.
Dan Dolev Thinks a BTC Focus Is Wrong for Block
In a recent interview, Dolev said that focusing on bitcoin is a huge mistake for Block, and that if it doesn’t stop, things would not turn out well for the company. He explained:
After years of rightfully being deemed the most innovative name in payments, we believe user fatigue, plateauing inflows, loss of the best-of-breed POS [point-of-sale] status, and BNPL [buy-now-pay-later] mis-executions are blocking SQ’s growth.
Bitcoin has suffered deeply as of late. Over the past few months, the currency has lost more than 70 percent in overall value following a surge to a new all-time high of $68,000 per unit last November. In addition, the cryptocurrency space has been brought down in valuation by more than $2 trillion, and it appears the industry is likely enduring the most bearish conditions of its 13-year history.
Dolev may have a point that focusing too much on bitcoin could wind up fatal for Block. Many other companies that have focused solely on BTC have not done well over the past few months, MicroStrategy being a huge example. Once a prominent software giant, the company has become one of the biggest institutional investors in bitcoin and added more and more over the years to its balance sheet.
Sadly, this turned out to be an issue given the bitcoin price is sinking into perdition. The company is falling into the doldrums and suffering from billions of dollars’ worth of debt, and Michael Saylor – the CEO that has headed the company over the past 33 years – was recently forced into a position of stepping down and serving only as its executive chairman so the company could be led in a new direction.
The Stock Falls When BTC Falls
One of the big problems with MicroStrategy is that it was tied too deeply to bitcoin that its stock shares correlated with the currency’s price, so when bitcoin went down, so did its stock. Dolev says this is starting to happen with Block and commented:
Assessing the stock’s behavior shows it closely tracks bitcoin. This is unfortunate as it distracts both management and investors from focusing on SQ’s broader ecosystem.
Not long ago, bitcoin fell into the $18,000 range after the Fed decided to hike rates again.
