A new app feature is sending shares of Square (NYSE:SQ) to all-time highs. The high-tech transactions enabler soared 10.6% last week after giving users the ability to buy and sell bitcoin within the Square Cash app. The stock's been on fire this year -- more than tripling -- with a 258% gain so far in 2017.

Square began testing bitcoin transactions with a small set of users earlier this month, and the move has helped boost the prices for both Square stock and likely bitcoin itself. The news actually broke two weeks ago, but last week got off to a strong start when Credit Suisse analyst Paul Condra bumped his price target from $31 to $37 on Monday, singling out the potential of the head-turning cryptocurrency initiative. 

Square stock has now hit an all-time high in 11 consecutive trading days, but no streak lasts forever. Shares are kicking off this week on a down note, as BTIG analyst Mark Palmer is downgrading the stock on fears that the cryptocurrency-fueled pop is making the stock overvalued in the near term. 

Square's open tab feature for merchants.

Image source: Square.     

Riding the rally

There's no denying that 2017 has been bitcoin's year. The currency's value has increased nearly tenfold this year as it kicks off this week north of $9,000. Square's access legitimizes the cryptocurrency, but it's also going to draw in speculators to kick the tires of the Square Cash app for access.

Condra at Credit Suisse feels that the biggest beneficiary will be the crypto-asset industry itself. Last week's move to raise his price goal from $31 to $37 is naturally positive on Square's strategy here, but Condra is sticking to his Neutral rating on the stock.

A day after Condra's move we saw Timothy Willi at Wells Fargo initiate coverage of the stock with a similarly neutral "Market Perform" rating. Willi expects compounded earnings growth of 50% through 2020, but he sees limited upside in the near term after the stock's run-up. His price goal of $42 is higher than Condra's target, but it's also merely keeping up with Square's buoyant ways.

If a pair of neutral analyst moves helped push the stock higher last week, one can argue that a bearish turn by a third Wall Street pro will trip up its impressive streak of hitting all-time highs. Mark Palmer at BTIG is downgrading the stock from neutral to sell on Monday, concerned about the stock's valuation. His laundry list of fears includes growing competition, credit-related risks, and macroeconomic worries. Square stock is now trading 31% higher this month largely on the bitcoin news, something that isn't sustainable if cryptocurrencies fall out of favor or if other payment giants hop on the trend. His $30 target on the shares implies 39% of downside.  

A breather isn't fatal, something that bitcoin and Square investors should know all too well. Square stock is one of this year's biggest winners, but it's not as if its fundamentals have improved like the share price has in 2017. Gross payment volume and adjusted revenue rose 31% and 45%, respectively, in Square's latest quarter.

Square has been a market darling since going public at $9 in late 2015, and hopping on the bitcoin bandwagon is a win-win for cryptocurrency and Square itself. However, when even the more bullish of analyst notes are coming from those with neutral ratings on the stock, it's time to brace for what could be a reasonable correction after this year's monster rally.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of Square. The Motley Fool has a disclosure policy.