Bitcoin bubble begins to burst, price plunges 60%April 10, 2013: 4:17 PM ET
It may be the beginning of the end for the Bitcoin bubble. The price of the virtual currency, which has increased almost 20-fold this year, plunged 60% Wednesday in the span of just five hours.
Bitcoin prices hit a high of $266 earlier in the day before dropping as low as $105 in choppy afternoon trading. It later bounced back to about $145, but that's still about 45% below the high.
The currency, which was created by an anonymous hacker just four years ago, has gained particular attention this year in the wake of a mini-bank run in Cyprus that raised concerns about the health of government-backed paper currencies like the euro and the U.S. dollar.
Jesse Colombo, an independent financial analyst and investor who keeps close tabs on bubbles at TheBubbleBubble.com, said the vertical jump in prices was a indicative of a "mania phase," and predicted Bitcoin prices will eventually retreat to pre-mania levels of less than $15 apiece.
Given that the Bitcoin market is relatively small (about $2.5 billion), it won't take much for a bubble to pop.