Bitcoin charged to a record high on Wednesday, a day after the cryptocurrency vaulted the $50,000 hurdle, even as analysts warned about the sustainability of such prices amid elevated volatility.
The world's biggest digital currency, which has a market capitalisation of over $900 billion, hit a record $51,721 price, fuelled by signs that it is winning acceptance among mainstream investors and companies, such as Tesla , Mastercard and BNY Mellon.
Despite the flurry of mainstream acceptance this year, some analysts warned that bitcoin was still far from becoming a widely used form of payment.
"We advise investors against viewing this as a 'mainstream moment' for crypto, and counsel caution before engaging in speculation as crypto is not a currency," said Mark Haefele, chief investment officer at UBS Global Wealth.
"We also do not think platform companies with existing in-house payment ecosystems will jump on the crypto bandwagon."
Bitcoin has risen eight-fold since last March and has added more than $700 billion in market value since September. JPMorgan questioned the "magnitude" of the jump on the back of a total flow of just $11 billion from institutional investors.
Bitcoin's limited supply - based on "miners" producing a set number of new coins - has led to holders charging a premium on bitcoin coming to market, JPMorgan analysts said in a note. Retail flows may have also magnified institutional flows, they said.
"We've closely watched the clear supply-demand imbalance over the past couple of months as there has been a significant uptick in institutional interest," said Brian Melville, director of strategy at Cumberland, the crypto arm of Chicago trading firm DRW.
Still, bitcoin's prices aren't sustainable unless its volatile price swings cool down quickly, said the JPMorgan analysts, who last month flagged bitcoin's emergence as digital gold.
"Bitcoin, at current market prices, has already more than doubled relative to gold in risk capital terms," they said, pointing to the digital coin's three-month realised volatility, at 87% versus 16% for gold.
Separately, US broker Wedbush said it sees less than 5% of public companies heading down the bitcoin investment path in the next 12 to 18 months.