Bitcoin surged past the $17,000 mark in the early hours of Friday morning, before crashing by around 11%.
The cryptocurrency was trading at around $15,300 as at 0620 GMT.
Bitcoin appears as volatile as ever with the rollercoaster ride leading to increasing worries over the bursting of a speculative bubble. It is now up by around 1900% over the past year and well over 50% over the past week.
The imminent launch of the first US bitcoin futures appears to have fed a frenzy of buying over recent days, leading to rising concerns of a huge potential crash further down the road.
“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” Nigel Green, founder and chief executive of deVere Group told Reuters.
“Also, an asset that goes almost vertically up should typically raise alarm bells for investors,” added Green.
Some traders believe it could only be a matter of days before Bitcoin reaches the $20,000 mark given the big influx of capital into the crypto space.
Over recent days bitcoin has been boosted by the announcement from CBOE Global Markets and CME Group that they will launch trading in futures on the cryptocurrency from December 10 and December 18 respectively.
It came after the US Commodity Futures Trading Commission gave its permission last week for bitcoin trading to begin on US exchanges.
Bitcoin is also thought to have been helped by increased trading in Korea.