The price of the Bitcoin virtual cryptocurrency is shown in this photo on a phone screen.
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Bitcoin's price spiked again on Wednesday after a sharp sell-off and surged again above $ 50,000 when Square announced it had bought the $ 170 million worth of cryptocurrency.
According to Coin Metrics, the world's most valuable digital coin rose 7.5% at 4 a.m. to a price of $ 50,683. The cryptocurrency rose to $ 51,369 a few hours earlier.
Other cryptocurrencies also got a boost: Ether and XRP rose 11.3% and 7.4%, respectively. So-called altcoins or alternative cryptocurrencies often increase in times of the strength of Bitcoin.
On Tuesday, Square announced it had bought 3,318 bitcoins at an average price of around $ 51,235. The fintech company, led by Jack Dorsey, CEO of Twitter, said Bitcoin now accounts for about 5% of its total assets.
It's not the first time Square has invested in bitcoin – the company bought the digital currency for $ 50 million last year. Dorsey is one of the most famous proponents of Bitcoin, having once said that he believes it will eventually become the "single currency" of the internet.
Bitcoin had a difficult start to the week, falling from a record high of $ 58,356 on Sunday to just $ 45,501 on Tuesday. It's not uncommon for Bitcoin to experience wild volatility attacks – the digital token infamously rose to nearly $ 20,000 in 2017 before entering the bear market the following year.
Bitcoin is still up more than 70% since the start of the year and over 400% in the past 12 months. The impressive rally in crypto assets caught the attention of everyone from Tesla CEO Elon Musk to U.S. Treasury Secretary Janet Yellen.
Earlier this week, Yellen described Bitcoin as an "extremely inefficient" means of payment and warned against its use in illegal activities.
"It's a highly speculative commodity and … I think people should be aware that it can be extremely volatile," the former Federal Reserve chairman told the New York Times at a DealBook conference. "I am concerned about the possible losses that investors may suffer."
Musk is now a fan of Bitcoin. His electric car company recently invested $ 1.5 billion in corporate funds in the cryptocurrency, and the billionaire tech entrepreneur said it could be "close to widespread adoption" by traditional financial services companies.
But even Musk has suggested that the current price level of Bitcoin may not be sustainable and tweeted over the weekend that he thinks the prices of Bitcoin and competing token ethers are "high".