Square Inc. Suffers from the "Bitcoin Mania"

The enthusiasm for Bitcoin is rising, but the cryptocurrency may have corrosive effects on the mainstream investing scene. Strangely, the stock of Square Inc. has fallen and target prices have turned bearish as the addition of a Bitcoin payment option was seen as an unwise move for the app business.

The shares of Square Inc. fell by 16% this Monday after BTIG analyst Mark Palmer downgraded SQ to sell from neutral as the firm cited "no clear path to profitability".

But the shares of Square have seen a rising trend as the company was boosted by general enthusiasm for fintech, and the stock has risen by more than 200% in the past year, and now commands a price of $41.02. With this, Square beat the S&P500, as the index only added 16% year-on-year.

Analyst Mark Palmer believes the stock price of Square already reflects enthusiasm for more accessible payment technologies, and adding Bitcoin may in fact hurt the company, as " any pause in the current Bitcoin mania" could be seen as bad news.

Along with the rise in the shares of NVIDIA, it seems the cryptocurrency boom is already affecting the mainstream investment scene, even as outright buying of cryptocurrencies is still small compared to Wall Street trading and investing volumes.

Square has unleashed an experimental buying and selling functionality on its app, not available for both users. The new thing is that users can both buy and sell Bitcoin. But Palmer believes the company's connection with Bitcoin may prove toxic.

At the same time, many altcoins aim to create apps for a similar type of peer-to-peer payment, although without centralized control. Some of the more prominent projects include OmiseGo, Status Network, Kin by Kik and others, as cryptocurrencies aim for mobile users and offer digital assets with lower fees compared to Bitcoin.

In addition, Square is facing business competition from other rising fintech apps, such as First Data Corp.