By Paul Vigna

Bitcoin topped $50,000 for the first time Tuesday, doubling in less than two months as the digital currency continued its run higher.

Bitcoin traded as high as $50,203.53, up 4.2% for the day and more than 73% for the year. The total market value of bitcoin in circulation rose to $940 billion.

The $50,000 level is an "emotional level for people in the space," said Brian Melville, head of strategy at trading firm Cumberland. But it is also a simple result of supply and demand, he said.

From August through December, about 150,000 new bitcoins were minted, he estimated. The firm calculated that about 359,000 bitcoins were bought in the same period, and that imbalance has continued in 2021. "It's a really important metric to watch."

That buying demand has brought not only a price rally, but a big expansion in terms of acceptance and recognition for an asset that was once an object of derision for regulators and lawmakers.

In February alone, Bank of New York Mellon Corp. said it would start treating bitcoin like any other financial asset. Mastercard Inc. said it would integrate bitcoin into its payments network this year. And Tesla Inc. said it purchased $1.5 billion worth of the cryptocurrency for its corporate treasury and plans to start accepting it for payment.

Additionally, billionaire investors such as Paul Tudor Jones and Stanley Druckenmiller have jumped into the space, attracting further attention. Interest from financial professionals -- investors and institutions -- has become a key driver of the rally.

Write to Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

02-16-21 0812ET