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Chinese social media giants are buying millions worth of cryptocurrency

Published: (Updated: ) in Australian News by .

Meitu, a tech firm known for a popular photo-editing app, said Sunday that it bought some US$40 million ($52 million) worth of cryptocurrency.

Tesla turned heads last month when it revealed that it had invested big in bitcoin. Now a Chinese company is jumping on the cryptocurrency bandwagon, too.

Meitu, a tech firm known for a popular photo-editing app, said Sunday that it bought some US$40 million ($52 million) worth of cryptocurrency.

That includes about $23.48 million worth of Bitcoin and more than $28.7 million worth of Ethereum.

READ MORE: Bitcoin uses more electricity than Argentina, Norway, study finds

"Cryptocurrencies have ample room for appreciation in value," the company said in a filing to the Hong Kong stock exchange.

Meitu added that buying the cryptocurrencies helps the company diversify its cash holdings, and said it showed that the firm wants to "embrace technological evolution, and hence prepare its foray into the blockchain industry."

It added that the company's board has approved it to buy as much as US$100 million ($130 million) worth of cryptocurrency.

Both currencies rose early Monday, but soon reversed gains.

READ MORE: Bitcoin has hit a fresh historic high. Here's why experts believe it will grow more

Bitcoin was last down 2.4 per cent to trade at US$49,560 per coin. Ethereum was down 0.3 per cent to US$1,676.

Meitu's stock, meanwhile, was volatile in Hong Kong. It surged as much as 14 per cent, but closed down more than 6 per cent, as tech stocks sold off.

Meitu, which means "beautiful pictures" in Chinese, makes selfie image-enhancing apps that allow users to make their eyes look wider, skin lighter, and faces slimmer.

It has nearly 300 million monthly active users, according to its most recent financial report.

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READ MORE: Bitcoin hits fresh high on Mastercard decision

Prices of cryptocurrencies have surged in recent months, benefiting from a weaker US dollar and expectations that a prolonged period of super low interest rates would create inflation.

Cryptocurrencies have also been getting validation from big names in Corporate America.

Bitcoin recently saw its market value shoot past US$1 trillion ($1.3 trillion) — largely thanks to Tesla, which said last month that it had bought US$1.5 billion ($1.96 billion) worth of bitcoin.

Elon Musk's carmaker also said it was looking at letting consumers use Bitcoin to buy its cars and SUVs.

READ MORE: Tesla buys $1.9B in Bitcoin, will accept digital currency as payment soon

Payments giants Square and PayPal recently began allowing customers to trade bitcoin. Credit card processing behemoths Visa and Mastercard are also embracing cryptocurrencies.

But there are some risks.

Bitcoin has pulled back a bit from its February peak, with a current market value of about US$930 billion ($1.2 trillion), according to Coinbase.

Meitu acknowledged in its company filing Sunday that crypto prices "in general" are "highly volatile," leading it to focus on just the two market leaders.

READ MORE: How Elon Musk is pumping 'Dogecoin'

US Treasury Secretary Janet Yellen, meanwhile, expressed worries last month about Bitcoin's wild price fluctuations.

Bitcoin has fallen 15 per cent in the past two weeks, but is still up more than 70 per cent since the start of this year.

"It is a highly speculative asset, and I think people should beware. It can be extremely volatile, and I do worry about potential losses that investors in it could suffer," Yellen said at a conference in New York.

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Source: 9News

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