As the Big Tech-heavy earnings week kicked off, Amazon quickly became a hot topic of conversation on Wall Street. The cloud and e-commerce giant reports its second quarter results only on Thursday. But rumors about the company’s involvement with cryptocurrencies sent shockwaves through the markets.

The Amazon Maven explains what happened on July 26 – and why Amazon stock  (AMZN) - Get Amazon.com, Inc. Report investors are probably better off ignoring the noise for now.

(Read more from the Amazon Maven: Amazon Stock: This Is How Subscriptions Matter)

Figure 1: Amazon + Bitcoin.

Figure 1: Amazon + Bitcoin.

Amazon + bitcoin: what happened

For the benefit of those who did not follow the news on Monday, Amazon was rumored to start accepting cryptocurrency for payment as early as the end of this year. In addition, the company was allegedly planning the launch of its own digital coin in 2022.

While Amazon stock price may have reacted positively to the developments, up more than 1% in the first hour of trading against a flat S&P 500, the key beneficiary seems to have been bitcoin. The crypto’s value surged and, for a moment, stayed above the $40,000 mark for the first time since mid-June.

Part of the rally seems to have been driven by a “good ol’ short squeeze”. Bloomberg reports that “more than $950 million of crypto shorts were liquidated on Monday, the most since May 19”.

By the end of the trading day, however, Amazon had taken the stage and denied the rumors. Starting around 3 p.m. EST, bitcoin’s price began to drop fast on the heels of the company’s official position on the matter, settling just north of $37,000 ahead of late evening trading.

Does it matter?

Despite the company’s denial, might the crypto rumors hold a hint of truth? On one hand, it seems plausible to me that the biggest name in e-commerce in the world would be interested in researching, adopting, and even developing digital currencies.

At the same time, the rumors seem to have been born out of (1) a job opening for a cryptocurrency and blockchain lead at Amazon and (2) a nameless insider’s account. I would probably need to see more journalistic due diligence before giving the story more credibility.

Regardless, I do not think that the adoption and development of cryptocurrencies is a key factor in AMZN’s investment thesis. The company has plenty of revenue growth and margin expansion opportunities ahead in e-commerce and cloud, with or without the help of bitcoin.

If anything, I believe that bitcoin may need Amazon more than the other way around – at least for now, as the cryptocurrency seeks to become a more viable medium of exchange and store of value.

(Read more from the Amazon Maven: Could Amazon Be A Space Exploration Giant?)

Twitter speaks

How much more likely would you be to shop on amazon.com, if the e-commerce giant started to accept bitcoin as payment?

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Amazon Maven)