The price of one bitcoin reached $875 on the Europe-based Bitstamp exchange, its strongest level since January 2014, putting the cryptocurrency on track for its best daily performance in six months.
That compared with levels around $435 at the start of the year, with many experts linking bitcoin's rise with the steady depreciation of the Chinese yuan, which has slid almost 7 percent this year.
Data shows the majority of bitcoin trading is done in China, so any increase in demand from there tends to have a significant impact on the price.
Bitcoin is a web-based "cryptocurrency" that can move money across the globe quickly and anonymously with no need for a central authority. That makes it attractive to those wanting to get around capital controls, such as China's.
Charles Hayter, founder of data analysis website Cryptocompare, said bitcoin had been helped higher by demonetization in India, and by global political uncertainty.