The extraordinarily rapid rise in the price of Bitcoin, a controversial form of currency yet to be widely accepted, has led many financial experts to call it a speculative bubble that's waiting to burst.
Bitcoin prices plunged by more than 20 percentage points on Friday as investors cashed out at the end of a tumultuous year that has seen the wildly volatile currency reach stratospheric heights in recent weeks.
The precipitous drop came after a series of warnings by analysts and governments about a bubble that could burst at any moment as investors, many inexperienced, piled into the cryptocurrency hoping to enjoy a quick gain.
The controversial cryptocurrency, which is not backed by any central bank or state, closed on Friday at $12,840 continuing a downward trend that began on Monday when it reached record high of $19,500.
Since then the cryptocurrency has declined more than 30 percentage points according to data compiled by Bloomberg.
After starting the year at near $1,000 the digital currency has soared to $10,000 by late November and nearly doubled that just a couple of weeks later.
The sell-off has had a knock-on effect on other cryptocurrencies such as Dash, Litecoin and Ripple, all of which were sent plunging.
Stephen Innes, head of foreign exchange trading for Asia Pacific at OANDA, said investors are having a "reality check."
"At the heart of the matter was a frenzied demand for coins with limited supply has now led to unsophisticated investors holding the bag at the top."
Some analysts attributed the plunge to profit-taking, while others said the drop was just another sign of the inherent volatility of the asset.
"There's no catalyst in particular for the drop," said Alexandre Baradez, an analyst for IG France.
"But bitcoin is 20 times more volatile than trading the euro to the dollar."
Shifting to cryptocurrency
At its height, Bitcoin had soared almost 30-fold since the start of the year, helped in part by its debut on mainstream markets as two major US exchanges who began trading Bitcoin futures.
The frenzy that has swept the Bitcoin world saw a New York beverage company this week announce it was shifting into cryptocurrency-related investments.
Long Island Iced Tea Corp of Farmingdale, New York said on Thursday it was changing its name to "Long Blockchain Corp" and would explore investments in the technology underlying cryptocurrencies. It's unclear whether the owners have had a change of heart given the precipitous decline of the currency.
Following the news, shares in the firm rose 180 percent on the tech-rich Nasdaq.
And on Friday, Belarus President Alexander Lukashenko signed a decree legalising Bitcoin and other cryptocurrencies and permitting "smart contracts" that run on the blockchain technology.
Central bank warnings
But Bitcoin began looking shaky on Wednesday when it took a 15-percent hit following news that the South Korean exchange Youbit had been hacked, leading the firm to say it will close and start bankruptcy proceedings.
South Korea and Japan are home to some of the largest number of traders in the currency.
The Youbit development came a day after US authorities suspended trading in a popular Bitcoin-related stock, citing concerns about market manipulation.
The Crypto Company's share price had risen 1,700 percent between the end of September and Monday evening before the Securities Exchange Commission intervened to halt trades until January 4.