BEIJING—Chinese demand has helped fuel a boom in the virtual currency called bitcoin. But even as prices reach new highs, Li Xiaolai says he won't sell.

Mr. Li, 41 years old, is one of China's biggest bitcoin holders, according to a fledging community of bitcoin watchers in Beijing. The former English test-prep teacher won't disclose specifics but says his bitcoin holdings are "in the six figures with the first figure being one." With bitcoin prices soaring to around $1,000 each, that makes his stake worth more than...