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 operates the leading e-commerce marketplace and digital payments platform in Latin America, with a presence in 18 different countries.
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.
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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 divides its business into two parts: the seller ecosystem and the Cash App ecosystem. The former provides merchants with the hardware, software, and…
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