Bitcoin prices are back in rally mode, just one week after it looked like the bubble had started to burst.

Early Friday, Bitcoin prices traded as high as $136.43 before pulling back to $119.36. That's more than double this week's low of $50.

Trading volume doubled in just two hours.

The price of the virtual currency, which was created by an anonymous hacker just four years ago, has increased almost 20-fold this year. It gained particular attention in the wake of a mini-bank run in Cyprus, which had raised concerns about the health of government-backed paper currencies like the euro and the U.S. dollar.

As traders and investors jumped on the bandwagon, prices spiked to $266.

The rush of activity led Mt. Gox, a Japan-based exchange that claims to handle 80% of Bitcoin trade worldwide, to halt trading.

Prices came down sharply when trading resumed, leading to speculation about whether the Bitcoin bubble had finally burst.

Related: Lost $50K in Bitcoins, but still a believer

Societe Generale currency analyst Sebastien Galy said the limited supply of Bitcoins is largely responsible for its wild price swings, which he says are subject to the whims of demand.

"It's a bubble which unfortunately pops and pops and pops until one day it either loses credibility or the supply reaches the total maximum they predicted, which is 21 million," he said.

-- CNNMoney's Hibah Yousuf contributed