Shares of $Block (SQ.US)$, the payments company started by former $Twitter (TWTR.US)$ CEO Jack Dorsey, tumbled nearly 7% on Thursday after an analyst downgraded the stock.

Mizuho Securities analyst Dan Dolev, an early proponent of the company, changed his "buy" rating for $SQ to "neutral," citing "user fatigue" and "bitcoin fixation" in a note published early Thursday.

"SQ still has enormous potential, but it is not being realized," Dolev said.

The stock lost 6.8% to $55.40 per share in midday trading Thursday, far outpacing losses in the Nasdaq (down 1.5%) and the S&P 500 (down 0.84%).

Growth in Cash App, the company's consumer payments app, is slowing, according to Dolev, while customer acquisition costs continue to rise. On the seller side of its business, Square's growth is slowing relative to its competitors.

The market share gains $Afterpay Ltd. (AFTPF.US)$ — Block's Buy Now Pay Later (BNPL) offering — has made in credit markets is also "abating" relative to others such as $Affirm Holdings (AFRM.US)$.

As for the company's bitcoin strategy, Dolev reiterated his stance that it has become a distraction or "Achilles Heel" for the fintech company's investors.

"Despite accounting for less than 5% of total company gross profit in 1H22, Bitcoin continues to drive a significant part of the sentiment around the stock," he said.

Like other public companies that hold bitcoin on its balance sheet, Block must account for it as an intangible asset. The company wrote down the value of its bitcoin holdings to its lowest value for the period, a $36 million loss on its balance sheet.

Block owns 8,027 bitcoins, which was valued at $146.8 million based on the lowest price the cryptocurrency traded this quarter.

Its bitcoin centric-subsidiary, called TBD, is focusing on a number of different initiatives to decentralize internet platforms with the goal of not using a token or even a blockchain to realize the outcome.

Earlier this year it announced a decentralized developer platform with Dorsey, referring to it as "Web5" over Twitter, a tongue-and-check stab at crypto's "Web3".

Year to date, SQ shares have fallen 65% from $144 to $55 while bitcoin has fared better, down by 54% and currently trading at $18,933 per coin.

"Assessing the stock's behavior shows it closely tracks Bitcoin," " Dolev said. "This is unfortunate as it distracts both management and investors from focusing on SQ's broader ecosystem."