Square Cash, the mobile payment app developed by Square, is growing faster than PayPal's Venmo, according to Nomura Instinet.

Since early 2016, Square Cash app downloads have averaged 128 percent year-over-year growth each month versus Venmo's 74 percent, according to a Nomura analysis.

With roughly 28 million cumulative downloads, the number of Square Cash downloads is just 1 million below Venmo's levels, analyst Dan Dolev said.

"Historically, Venmo saw more downloads versus Square, but the gap appears to have peaked in July 2017," Dolev said in a note to clients Wednesday, reiterating his buy rating on the stock.

The app appears to be getting an added boost because it allows transactions in bitcoin, the analyst noted.

"With Square Cash App now open for Bitcoin trading in most states, comparing its growth versus the popular Coinbase app is noteworthy," he added. "Here, while Coinbase saw growth peak around the holiday time — as Bitcoin prices spiked — Coinbase's growth has slowed from record levels, whereas Square Cash App experienced more balanced growth."

Dolev has consistently lauded Square Cash as a potential revenue driver for the payment company. His 12-month stock price target of $65 implies more than 18 percent upside over the next year.

Though Square said it sold a total of $34.1 million in bitcoin in the first quarter, it initially spent $33.9 million to purchase the cryptocurrency, netting a final adjusted revenue of just $200,000.

Shares of Square were up 1.9 percent Wednesday morning.

Despite issuing guidance that fell short of Wall Street's expectations earlier this month, Square has outperformed the broader stock market over the past year, up 57 percent since January and 168 percent year over year.

In its first-quarter earnings report earlier in May, the payments company said it will continue to reinvest, focusing on revenue growth over profit expansion.

"Given the significant market opportunity ahead of us, we will continue to reinvest in our business to drive future growth," it said in a statement this month.

Gross payment volume grew 31 percent to $17.8 billion for the quarter, in line with the growth rate seen in the fourth quarter.