Crypto investors have been hit hard in recent weeks. The top two tokens -- Bitcoin and Ethereum -- have fallen 40% and 35% from their highs, respectively. And nearly $1 trillion has been erased from the crypto market since the beginning of May.

Even so, now looks like a good time for Bitcoin-believers to pick up a few shares of MercadoLibre (NASDAQ:MELI) and Square (NYSE:SQ). Both fintechs stand to benefit as cryptocurrency becomes more popular, and market downturns are often a buying opportunity in hindsight. Here's what investors should know. 

MercadoLibre

MercadoLibre operates the leading e-commerce marketplace and digital payments platform in Latin America, with a presence in 18 different countries.

Bitcoin symbol in the sand.

Image source: Getty Images.

Over the years, MercadoLibre has slowly integrated crypto into its ecosystem. In 2015, the company started allowing users in Mexico to make purchases with Bitcoin, a decision that was driven by demand from both consumers and merchants.

Then in 2018, the company partnered with BitPay in Brazil, enabling crypto-powered purchases of MercadoLibre gift cards from within the BitPay wallet. Those gift cards can be used to shop on the marketplace or to fund a Mercado Pago account.

More recently, MercadoLibre purchased $7.8 million in Bitcoin for its balance sheet. During the Q1 earnings call CFO Pedro Arnt noted two reasons for this: First, it's part of the company's treasury strategy, as management believes Bitcoin is a good long-term store of value. Second, this allows MercadoLibre to "quickly [move] up the learning curve in terms of understanding crypto," which will allow it to capitalize on future opportunities as they arise.

In April 2021, MercadoLibre doubled down on crypto, launching a new real-estate platform that only accepts payment in Bitcoin. Within hours of the launch, 75 properties were available and the company expects that figure to grow over time.

All of these moves underscore the company's growing interest in cryptocurrency. More importantly, each step has been met with enthusiasm from consumers and merchants.

While it's impossible to identify the precise impact of cryptocurrency, MercadoLibre's business has grown quickly since introducing Bitcoin as a payment option in 2015.

Metric

2015

Q1 2021 (TTM)

CAGR

Revenue

$651.8 million

$4.7 billion

46%

Free Cash Flow

$157.1 million

$682.9 million

32%

Source: MercadoLibre SEC Filings. TTM = trailing-12-months. CAGR = compound annual growth rate.

Notably, Amazon is one of MercadoLibre's largest competitors in Latin America, but it doesn't have a digital wallet to rival Mercado Pago. That gives MercadoLibre an advantage, and its growing acceptance of cryptocurrency furthers that advantage.

That's why MercadoLibre should be at the top of your watchlist, especially during downturns in the crypto market. If crypto disappears completely, MercadoLibre will be fine -- it will still have a thriving online marketplace and digital payments ecosystem. But if crypto rebounds (as it has in the past), it could drive more consumers and merchants to MercadoLibre's crypto-friendly platforms.

Square

Square divides its business into two parts: the seller ecosystem and the Cash App ecosystem. The former provides merchants with the hardware, software, and services they need to start and manage a business, while the latter provides consumers with financial tools that help them to send, spend, and invest money.

White Square hardware at bakery checkout.

Image source: Square.

In January 2018, Square started allowing Cash App consumers to trade Bitcoin. In hindsight, that move was a stroke of genius. Monthly active users skyrocketed from 7 million in 2017 to 36 million by the end 2020 -- a compound annual growth rate of 72%.

To add, as Bitcoin soared 300% last year, the positive impacts on Square's business became even more pronounced. During 2020, more than 3 million consumers traded Bitcoin through Cash App, driving engagement with other services as well, like the Square Cash Card and direct deposit. As a result, Cash App gross profit skyrocketed 168% last year, reaching $1.2 billion.

Metric

2017

2020

CAGR

Seller Gross Profit

$777 million

$1.5 billion

25%

Cash App Gross Profit

$47 million

$1.2 billion

196%

Source: Square SEC Filings. CAGR = compound annual growth rate.

Here's the big picture: As Bitcoin has become more popular, Cash App has become more profitable. But the seller ecosystem has also delivered strong results, especially when you consider the pandemic-related headwinds (i.e. many brick-and-mortar retailers closed their doors during 2020).

That's why investors should consider buying this fintech stock, especially during dips in Bitcoin's price. If Bitcoin never recovers, Square's ecosystems still offer significant value to both merchants and consumers. But if Bitcoin comes roaring back, Square's business should benefit just as it has in recent years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.