The firm's analysts describe three key drivers boosting the price of bitcoin in recent weeks, including assurances that U.S. policymakers will not ban cryptocurrencies.

JPMorgan Sees Renewed Interest in Bitcoin

JPMorgan published a research note Thursday stating that institutional investors are returning to bitcoin. Citing the trend of money flowing out of gold into BTC, the firm's analysts wrote:

"Institutional investors appear to be returning to bitcoin perhaps seeing it as a better inflation hedge than gold."

The analysts explained that there are three key drivers pushing the price of bitcoin from about $40K to about $55K in a short period of time. The price of bitcoin is $53,853.14 at the time of writing based on data from Bitcoin.com Markets.

The first is "The recent assurances by U.S. policymakers that there is no intention to follow China's steps towards banning the usage or mining of cryptocurrencies." Both Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler told Congress this week that they had no intention to ban cryptocurrency as China did. The SEC chief said his agency is taking a different approach to China, focusing on investor protection and regulation.

The second reason is "The recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador's bitcoin adoption," JPMorgan detailed. El Salvador made bitcoin legal tender in early September. The country has bought 700 BTC and President Nayib Bukele claimed that 3 million Salvadorans are already using the government's bitcoin wallet, Chivo.