Bitcoin is essentially "digital gold" for millennials, and the cryptocurrency could easily achieve the $100,000 range, Wall Street strategist Tom Lee told CNBC on Wednesday.

The digital currency surpassed $10,000 on Tuesday and was approaching $11,000 Wednesday morning, according to industry site CoinDesk. It marked an exponential ascent from 6 cents seven years ago and less than $1,000 at the start of this year.

At $10,000, the cryptocurrency is solving a problem in the digital economy, which is "digital trust," said Lee, co-founder of Fundstrat Global Advisors.

"It's valued as if it is a small company today," Lee told "Squawk Box." "We think over the next 10 years, this new generation of millennials are going to view trust as a replacement for gold. So, bitcoin is essentially digital gold for another generation."

If bitcoin captures "5 percent of just the gold market, it's $25,000," Lee added. "But 5 percent seems like an awfully small number. Let's say it's 10 or 15. Then bitcoin could easily be in the $100,000 range."

After turning cautious on bitcoin earlier this month, Lee raised his mid-2018 price target for bitcoin to $11,500 from $6,000 last week. Lee said Wednesday that in the early stage of bitcoin's rise he mistakenly treated it as a currency.

"That's really the wrong framework for bitcoin," he said.

Bitcoin, which is up more than 130 percent over the last three months, has risen as exchanges such as the CME Group and Cboe Options announced plans to launch futures contracts for the currency.

Earlier this week, former Fortress hedge fund manager Michael Novogratz predicted on CNBC that bitcoin could "easily" be at $40,000 at the end of 2018.

—CNBC's Evelyn Cheng and Reuters contributed to this report.