Bitcoin has surged more than 70% year-to-date, and this week's announcement that PayPal would allow its users to buy, sell, and exchange the asset served as another high-level endorsement for the cryptocurrency.

Earlier this month, Square purchased $50 million worth of bitcoin as it further commits to viewing the digital currency as a long-term investment.

But bitcoin is still a relatively small asset class, and it's mostly favored by millennial investors who are not as influential in the market as older generations that predominantly favor physical gold.

According to JPMorgan, the physical gold market is worth $2.6 trillion, which includes assets held within gold ETFs.

For bitcoin to catch up to gold in terms of market value, the crypto currency would have to surge 10x from current levels.

"Even a modest crowding out of gold as an 'alternative' currency over the longer term would imply doubling or tripling of the bitcoin price," JPMorgan said.

And over time, crypto could be held for other reasons than being a store of wealth as gold is, according to JPMorgan.

"Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value," JPMorgan explained.

Simply put, the risk is to the upside for bitcoin.

"The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an 'alternative' currency we believe, given that Millenials would become over time a more important component of investors' universe," JPMorgan concluded.

The technicals are also pointing to a continued surge in bitcoin. According to technical strategist Katie Stockton, the cryptocurrency could surge to $14,000 as short-term momentum improves.