Bitcoin price goes on wild ride

Bitcoin prices went through wild swings overnight.

NEW YORK (CNNMoney)

According to prices quoted on Mt.Gox, the main trading exchange for bitcoins, the value of one bitcoin ricocheted in overnight trading from $106 to as high as $147, then back down to $125, then to $141.

Two weeks ago a bitcoin was worth only $47. When Mt.Gox started tracking prices in mid-2010 the price stood at only 5 cents per bitcoin.

Investors have been pouring into bitcoins and gold in recent weeks, as authorities in Cyprus imposed a tax on top bank depositors and placed limits on bank withdrawals in order to pay for a European bailout of the banking system there.

Related: Bitcoin prices surge following Cyprus bailout

Bitcoin is a four-year-old digital currency developed by a hacker who still remains anonymous. It's designed to allow worldwide payments with extremely low processing costs.

Societe Generale currency analyst Sebastien Galy said the market for bitcoins is likely to remain incredibly volatile. New investors are flooding into the market to try to cash in on the wild price swings.

Related: Why cyber currency Bitcoin is trading at an all-time high

He said that as more people purchase and trade bitcoins, the currency's supply is supposed to increase. But some traders are buying and holding the bitcoins in an effort limit supply and drive up the prices.

"It's a fascinating, very small niche market," he said. "There's a limited amount of supply that's available, and it creates waves of upswings. It's a bit like the gold rush in California. Everyone is rushing into and it and everyone is over excited. But that makes it very risky. It should come with significant warnings of buyer beware."

-- CNNMoney's Maureen Farrell contributed to this report

First Published: April 3, 2013: 10:27 AM ET

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