Shares of payment company Square spiked 5 percent Wednesday after an analyst said it could see a major first-quarter earnings boost thanks to bitcoin.

Square Cash, the mobile payment app developed by Square, opened bitcoin trading earlier this year. That move could drive a "sizable boost" to the tech company's revenue and profits this quarter and a 10 percent potential upside to adjusted EBITDA guidance, according to Nomura Instinet analyst Dan Dolev.

"This can help offset rising investment costs required to broaden Square's international presence," Dolev wrote in a note to clients Wednesday.

Instinet reiterated its buy rating and raised its price target by a dollar to $65, about $15 above where Square was trading Wednesday. Dolev cited more disruption in the payments space and more higher-margin products and services as reasons for the bullish call. Square's stock is up more than 48 percent this year.

The upside for Square could be seen as soon as this quarter's earnings report, which is set for May 2.

Bitcoin trading on Square Cash kicked off on Jan. 31, and Dolev said additional revenue per user could amount to $125 every year. About 2 to 6 percent of Square Cash app users trade bitcoin, which brings a 1 to 3 percent boost to adjusted revenue and as much as a 10 percent boost to adjusted EBITDA, Dolev said. On the high-end guide of adjusted EBITDA, Dolev said it could be as much as 12 percent.

Shares of the company had risen 4 percent in January following CEO Jack Dorsey's announcement that users of Square's Cash payments app could buy and sell bitcoin on the platform. The service is still not available for customers in New York, Georgia, Wyoming or Hawaii, according to Square's website.

Dorsey has been bullish on the future of cryptocurrency. The CEO, who also runs Twitter, said in March that bitcoin would become the world's single currency.

"The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin," Dorsey said in a report. It would happen "probably over ten years, but it could go faster."

Dorsey's other San Francisco-based tech company, Twitter, recently banned cryptocurrency advertising on the social media site.