Bitcoin Bulls Celebrate Goldman, Square News -- But Should They?

(Bloomberg) -- Bitcoin bulls may want to curb their enthusiasm.

The cryptocurrency rose toward a two-month high Thursday amid optimism sparked by news that Goldman Sachs is moving forward with Bitcoin trading operations. Adding to the gleeful tone, Square's latest report included a line suggesting it got $34 million of revenue related to the tokens last quarter.

Yet, there were key details in both reports that perhaps could give investors pause. Goldman isn't buying and selling actual Bitcoins. Instead it's taking a step forward with long-disclosed efforts to explore crypto trading, planning to start small by offering a limited number of derivatives, according to a person briefed on the decisions.

It's a reminder that many traditional financial institutions, bound to a long list of rules from regulators, are still a long way from figuring out how to deal with crypto directly.

Read Bloomberg's December story on Goldman building a crypto trading desk

Meanwhile, Square's maiden disclosure of Bitcoin's contribution to its financials isn't quite as unabashedly bullish for the currency. While $34.1 million in revenue did come from selling Bitcoins to users of its Cash App, it cost Square $33.9 million to buy those Bitcoins, meaning that the firm really only made about $200,000.

Still, some say the company's enthusiasm for digital currencies and blockchain technology is a sign of progress for the nascent industry.

Bitcoin climbed 2.4 percent to $9,399.43 at 10:36 a.m. in New York. Shares of Square fell 2.6 percent to $47.40 after profit projections missed estimates Wednesday.

To contact the reporter on this story: Lily Katz in New York at lkatz31@bloomberg.net.

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Jeremy Herron, Eric J. Weiner

©2018 Bloomberg L.P.