Has the bitcoin fever broken?
Bitcoin prices plunged sharply to below $11,000 on Friday, shedding a third of its value in just 24 hours, according to data from CoinDesk.com. It later rebounded slightly to around $12,000 -- but that's still a stunning 25% less valuable than bitcoin was Thursday morning.
Prices had approached $20,000 as recently as Sunday.
The turbulence comes on the back of a few days of bad news for bitcoin, which has still soared by more than 1,000% since the start of the year.
On Thursday, a bitcoin spinoff called bitcoin cash was suspended from one of the most popular exchanges after possible insider trading.
Related: What is bitcoin?
Meanwhile, the U.S.'s markets regulator halted trading in a red-hot bitcoin stock.
Earlier in the week, a South Korea-based virtual currency exchange was forced to close its doors after falling victim to two attacks by hackers in the space of a few months.
The incidents have raised questions about the reliability of cryptocurrency markets, which aren't regulated by governments or central banks.
But some argue bitcoin is just taking a breather -- albeit a big one -- after a furious 2017.
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"A correction like we are witnessing today is hardly surprising," said Dave Chapman, managing director of Hong Kong cryptocurrency trading platform Octagon Strategy.
The plunge threatens to take the shine off what's been an incredible year for bitcoin. This time last year the virtual currency was worth less than $1,000.
The rally has been driven partly by the expectation that more and more mainstream investors will begin trading it.
Earlier in December, two major U.S. financial exchanges launched trading in bitcoin futures, which will help give it more clout with big, institutional investors.
Related: Looking to sell bitcoin? It's complicated
Bitcoin's dizzying ascent has prompted a number of high-profile figures in finance and economics to sound the alarm, cautioning that the currency's boom is simply a huge bubble.
Among them are outgoing Federal Reserve Chairwoman Janet Yellen, who described virtual currencies as "highly speculative."
However, Shane Chanel, an adviser at Australian investment firm ASR Wealth Advisers, thinks investors could start shifting their focus to virtual currencies other than bitcoin over the coming months.
"I feel the cryptocurrency madness is only beginning," he said.
CNNMoney's Jackie Wattles contributed to this report.
Cryptocurrency falls more than 30% in five days after troubled week but analysts say it could easily bounce back
Bitcoin went into freefall on Friday, its price collapsing from the dizzying heights of nearly $20,000 (£14,965) earlier this week to about $13,000 after its year-end rally appeared to run out of steam.
According to the CoinDesk exchange, the cryptocurrency was trading at $13,155, a fall of over 30% in five days.
Tiny US soft drinks firm changes name to cash in on bitcoin mania Read more
Its price has fallen by more than $2,000 in 12 hours.
It came after a troubled week for bitcoin, in which a cryptocurrency exchange went bust in South Korea following a cyberattack, knocking its price.
Coinbase, another exchange based in the US, also said it was opening an investigation into sharp price increases.
Neil Wilson, a senior market analyst at ETX Capital, said: “Has the bubble finally popped? It’s hard to see the bell tolling just yet. Large price swings have become so normal that it’s hard to decide – we can easily see this market bounce back in very short order.
“Whilst there have been some hacks, public infighting in the mining community, lots of rumoured forks and regulatory pressure building on some fronts, this is likely to be a simple bout of risk-off selling as investors rebalance towards year-end.
“It looks like it’s time to cash in the gains and spend the winnings on a bumper Christmas.”
But it has not all been bad news for bitcoin this week.
The Chicago Mercantile Exchange launched its own bitcoin futures trading on Monday, following in the footsteps of the Chicago Board Options Exchange.
US regulators approved futures trading in bitcoin earlier this month and Goldman Sachs is reportedly gearing up to enter the market.
The JP Morgan boss, Jamie Dimon, has branded Bitcoin a fraud, but Christine Lagarde, the head of the International Monetary Fund, said “it may not be wise to dismiss virtual currencies”.
The UK Treasury has announced plans for closer scrutiny of the cryptocurrency as part of EU-wide plans that will require online platforms that trade in bitcoin to carry out due diligence on customers and report suspicious transactions.
But that has not curbed excitement over its emerging investment opportunities.
Despite its Friday flop, the currency was still well up on the year, rising from about $900 in January to about $13,000.
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The price of bitcoin is down more than 25 percent from an all-time high of nearly $20,000 reached this past weekend, market data shows.
Prices fell to as low as $14,502 to start today's trading session, according to CoinDesk's Bitcoin Price Index (BPI), about 27 percent from the all-time high of $19,783 reported on Dec. 17.
Overall, bitcoin has seen several notable price drops following Sunday's gains, including a dip below $17,000 on Tuesday that accounted for a roughly $1,800 drop on the day. Indeed, analysts have suggested that the price could experience continued volatility as 2017 comes to a close and new money, brought in by bitcoin's meteoric gains, exits for fiat.
But, others may be testing the waters in alternative cryptocurrencies, as bitcoin is far from alone in having seen its price recently hit an all-time high.
According to data from OnChainFX, which charts price developments for cryptocurrencies, all of the top-20 coins by market capitalization have seen an all-time high within the past four days. Of those, cryptocurrencies like bitcoin cash, dash and litecoin have since posted declines in the last 24 hours.
Dropping water image via CoinDesk archive
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
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Bitcoin continues to give its investors a volatile ride. This week it has lost more than a third of its value from its record high of nearly $20,000.
On Friday, the cryptocurrency's price fell below $11,000, according to the Coindesk exchange website, before recovering to about $12,000.
This puts it on track for its worst week since 2013.
Bitcoin has had a blistering trip over the past 12 months. Its price at the start of the year was $1,000.
Charles Hayter, founder and chief executive of industry website Cryptocompare, said: "A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes."
He said a lot of traders would have been cashing in on the spectacular gains made over the year.
The past few weeks have seen it gain some legitimacy after two major exchanges in the US started trading futures contracts underpinned by Bitcoin.
This allows investors to bet on where they expect the price of Bitcoin to be at certain points in the future.
Trading on Friday was so rocky both exchanges, the CME and the CBOE, stopped trading temporarily.
Many global exchanges have automatic brakes that apply once a commodity or asset has moved by a certain amount.
Regulators around the world have stepped up their warnings about its provenance as an investment.
Its origins are only barely understood, its volatility is extreme and its use as a currency is limited.
One of this week's most striking comments comes from Denmark's central bank governor, who called it a "deadly" gamble.
Earlier this month, the head of one of the UK's leading financial regulators warned people to be ready to "lose all their money" if they invested in Bitcoin.
Andrew Bailey, head of the Financial Conduct Authority, told the BBC that neither central banks nor the government stood behind the "currency" and therefore it was not a secure investment.
