The price of bitcoin swung back and forth by hundreds of dollars today after the infamously volatile cryptocurrency yesterday surpassed $11,000 for the first time.
The rollercoaster ride began last night when bitcoin dropped by as much as 20 per cent after it notched an all-time high as some of the top online exchanges experienced outages.
At the time of writing, bitcoin's price was down 4.44 per cent at $9,380.38, according to Coindesk's aggregate index. It has so far failed to break $11,000 again today, though it has reached as high as $10,681.
David Cheetham, chief market analyst at XTB, said bitcoin's increased volatility was a warning sign.
"Despite an incredible run higher in the largest cryptocurrency by market valuation this year, the recent trade in bitcoin has become increasingly erratic with price swinging wildly," Cheetham said.
"Given a year to date rally in excess of 1000 per cent to Wednesday's high, some sort of decline should not come as too much of a surprise, especially when you consider that there have already been three 25 per cent+ drops this year.
"However, the latest drop was far sharper in its descent than prior incarnations with scarcely five hours elapsing between the all-time high above $11,400 printing and the daily low in the low $9,000s being seen. In nominal terms the fall is even more frightening when you consider that approximately $36bn was wiped off the valuation in just a matter of hours."
Meanwhile, a European Central Bank director today said banks need to introduce instant payments as soon as possible to counter cryptocurrencies like bitcoin.
Yves Mersch, a member of the ECB's executive board, said: “Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes."
Andreas Treichl, the boss of Austria's biggest lender, Erste Group Bank, and Europe's longest-serving bank chief, also made a jab at bitcoin today, saying central banks will clamp down on cryptocurrencies on Bloomberg Television.
He said: "It’s fascinating, but it will make central banks lose control, and they are not going to let this happen.
"At some point in time, maybe at $20,000, $25,000, $30,000, somebody will say ‘Stop!’”