According to JPMorgan, these are the 3 main drivers of bitcoin's 35% rise in the past week

Bitcoin has staged a tremendous rally since its low around $40,000 in late September, rising almost 35% and easily breaking key technical resistance levels.

According to a JPMorgan note on Thursday, the rise in bitcoin's market value above the $1 trillion market valuation is influenced by a number of factors, including the increased appetite of institutional investors seeking to hedge against inflation . Bitcoin's growing role as a perceived hedge against inflation has weakened gold prices, which have remained unchanged for almost two years, despite growing fears of rising inflation.

"Institutional investors appear to be returning to bitcoin, perhaps seeing it as a better inflation-proofing tool than gold," JPMorgan said, adding that the previous trend of outflows from gold to bitcoin has reappeared in recent weeks.

According to the note, JPMorgan offered three main factors to explain why bitcoin rose from $40,000 to around $55,000 in a few weeks.

1. "Recent assurances from US politicians that they do not intend to follow China's moves to ban the use or mining of cryptocurrencies."

2. "The recent rise in popularity of the Lightning Network and second-tier payment solutions facilitated by the introduction of bitcoins in El Salvador."

3. "The resurgence of inflation fears among investors has renewed interest in the use of bitcoins as a hedge against inflation."

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With gold failing to serve as a reliable hedge against inflation in recent months, investors are taking action. According to the bank, more than $10 billion has flowed out of gold ETFs since the start of the year, while more than $20 billion has flowed into bitcoin funds.

And these flows of funds into bitcoins have helped increase bitcoin's share of the overall cryptocurrency market to almost 45% from a low of 41% in mid-September. "The increase in bitcoin's share is healthy as it is more likely to reflect institutional participation than smaller cryptocurrencies," said JPMorgan.

While bitcoin is still 15% below its record high of $65,000 reached in mid-April, the cryptocurrency has risen 86% since the start of the year. Meanwhile, gold has fallen 7% so far this year.