NEW YORK/LONDON (Reuters) - Bitcoin touched a market capitalization of $1 trillion as it hit yet another record high on Friday, countering analyst warnings that it is an economic side show and a poor hedge against a fall in stock prices.

The worlds most popular cryptocurrency jumped to an all-time high above $54,000, setting it on course for a weekly jump of more than 11%. It has surged roughly 64% so far this month and was last up 5.5% at $54,405.

Bitcoins gains have been fueled by signs it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.

All digital coins combined have a market cap of around $1.7 trillion.

If you really believe theres a store of value in bitcoin, then theres still a lot of upside, said John Wu, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.

If you look at gold, it has a market cap $9 or $10 trillion. Even if bitcoin gets to half of golds market cap, that still growth of 4X, or $200,000. So I dont know when it stops rising, he added.

Still, many analysts and investors remain skeptical of the patchily regulated and highly volatile digital asset, which is little used for commerce.

Analysts at JP Morgan said bitcoins current prices were well above estimates of fair value. Mainstream adoption increases bitcoins correlation with cyclical assets, which rise and fall with economic changes, in turn reducing benefits of diversifying into crypto, the investment bank said in a memo.

Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed, JP Morgan said.

Bitcoin is an economic side show, it added, calling innovation in financial technology and the growth of digital platforms into credit and payments the real financial transformational story of the COVID-19 era.

Other investors this week said bitcoins volatility presents a hurdle for it to become a widespread means of payment.

On Thursday, Tesla boss Elon Musk - whose tweets have fueled bitcoins rally - said owning the digital coin was only a little better than holding cash. He also defended Teslas recent purchase of $1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.