Bitcoin crashes after nearing all-time high

Investing.com - Prices of web-based digital currency Bitcoin collapsed on Thursday, as a record-setting rally appeared to run out of steam.

fell by more than 20% to as low as $890.00 on the New York-based itBit exchange at one point, before recovering to $978.40 by 8:40AM ET (13:40GMT), down around 14% on the day.

Other big exchanges such as , and also showed the cryptocurrency falling below $900 early Thursday, before bouncing back.

According to the CoinDesk Bitcoin Price Index, which averages prices from the major exchanges, prices of the crypto-currency dropped 14.4%, to $967.26.

Elsewhere, yuan-denominated Bitcoin prices on Shanghai-based crashed 21.7% to ¥6,710.60 (approximately $982).

Prices on U.S.-based exchanges rallied to as high as $1,150 , less than $100 below its November 2013 all-time high of $1,216.

The digital currency rose nearly 125% in 2016 amid heavy buying from China and India, as investors look to shield themselves from currency depreciations, capital controls and cash crunches.

U.S. and European buyers also accounted for the bulk of trading volume, as traders look for safe havens following dramatic political shifts in the world economy.

Analysts say prices of the digital currency look set to test all-time highs of $1,216 in the near-term. Some even expect it to reach price parity with gold later this year amid increasing demand for alternative assets.

Bitcoin is digital cash and is not backed by a government or central bank to regulate or issue it. It can be used to purchase goods and services from stores and online retailers.