Bitcoin hits $11,000 and then plummets. What next?

The bitcoin roller coaster is picking up speed.

The virtual currency powered past $11,000 for the first time on Wednesday, capping a jaw-dropping rally of more than 1,000% since the start of the year. But it then plunged by more than $2,000, providing a stark reminder of its extreme volatility.

Long shunned by regular investors as a murky domain for cranks and criminals, bitcoin has gained growing mainstream acceptance this year, helping propel its value higher and higher.

It’s been smashing through milestones at an increasing rate: it soared above $8,000 just over two weeks ago and only passed $9,000 for the first time over the weekend.

On Wednesday, bitcoin climbed as high as $11,350. But it then nosedived more than 18% to below $9,300 as two major exchanges where it’s traded said they were struggling to deal with a huge spike in traffic. By Thursday morning in Hong Kong, it had regained some ground to trade around $10,400.

While bitcoin’s stratospheric rise this year has prompted warnings of a bubble, experts say that the gains in recent weeks have been driven in part by the expectation that more major investors — like hedge funds and asset managers — are gearing up to start investing in the digital currency.

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Next month, investors should be able to start trading bitcoin futures via the Chicago Mercantile Exchange, which is expected to give the virtual currency more legitimacy among professional investors. Futures allow traders to bet on the future price of assets like currencies, metals and agricultural commodities.

Bitcoin is one of many cryptocurrencies that have proliferated in recent years. Unlike the dollar or the pound, these virtual “coins” aren’t tied to a central bank. Instead, they are “mined” by computers using complex algorithms.

The decentralized nature of bitcoin is what appeals to many of its enthusiasts and unnerves a lot of its skeptics.

It also makes it harder to settle arguments about whether the currency’s huge gains this year amount to a bubble. Unlike stocks, its value isn’t based on earnings or dividend payouts, and unlike bonds it doesn’t pay investors a steady stream of income.

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And the global market for bitcoin, at nearly $190 billion, is still relatively small. The S&P 500 stock index, for example, is worth more than $20 trillion.

“What is the fundamental value of bitcoin? No one knows the answer to this question,” said Arthur Hayes, CEO of Hong Kong’s Bitmex, a bitcoin derivatives exchange.

Experts said previously that the $10,000 mark would be a key milestone for the digital currency. Hayes and other industry insiders are predicting that the publicity surrounding bitcoin will continue to lure big investors and push prices even higher.

“Institutional investors … will begin to pull the trigger in 2018,” he said.

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The virtual currency has famously attracted the derision of JPMorgan Chase CEO Jamie Dimon, who called it a “fraud” that would “eventually blow up.” Warren Buffett has also expressed skepticism, warning of a “real bubble.”

But other leading figures in finance have defended it. Goldman Sachs CEO Lloyd Blankfein pointed out last month that “folks also were skeptical when paper money displaced gold.”

Bitcoin’s stunning ascent this year hasn’t been particularly smooth.

Wednesday’s sudden losses after it topped $11,000 was the latest in a series of jarring drops.

In September, it plunged as much as 20% after the Chinese government cracked down on offerings in the digital currency, prompting bitcoin exchanges to close their doors.

Earlier this month, it plummeted by up to 30% within the space of a few days, before quickly bouncing back, after it appeared traders were switching to rival cryptocurrencies.