After turning cautious on bitcoin earlier this month, Fundstrat's Tom Lee told clients Wednesday to jump back into the digital currency.

"A few weeks ago, we turned short-term neutral on bitcoin as the price level then (~$7400) exceeded our estimate of fair value," Lee wrote in the report. "Last week, Bitcoin fell to $5,600 and since then rebounded. In our view, this move to $5,600 cleaned up weak hands and we no longer feel caution is warranted. … We recommend steady buying of Bitcoin at these levels."

As a result, the strategist raised his mid-2018 price target for bitcoin to $11,500 from $6,000, representing nearly 40 percent upside to its current level.

Lee is bullish on the crypotcurrency because of his forecasts for strong growth in the number of bitcoin accounts and transaction dollar volume per account. He noted how Coinbase has more than 14 million accounts.

The price of bitcoin rose 1.3 percent to $8,200 Wednesday. It surpassed the $8,000 level for the first time Sunday, according to data from industry website CoinDesk. The digital currency is up more than 700 percent so far this year.

Big Wall Street banks are not ignoring the digital currency's rise. Despite JPMorgan Chase CEO Jamie Dimon's outspoken criticism on the viability of bitcoin as an investment, the bank is looking at allowing its clients to trade bitcoin futures, according to a Wall Street Journal report Tuesday.