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Bitcoin dives 30% after touching record $900

Monday, 18 Nov 2013 | 9:50 PM ET
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Bitcoin dived more than 30 percent early Tuesday Asia time, after briefly touching a record high of $900.

The virtual currency fell to as low as $585 on the Mt. Gox Exchange, before rebounding to around $750.

Zennon Kapron, managing director of research firm Kapron Asia, said the correction is natural given the rapid rise of the virtual currency, but he does not see a bubble building.

"The valuations that we are seeing right now are certainly not the right valuations for Bitcoin. When Bitcoin becomes accepted globally and can be used for buying petrol, shopping for groceries, etc., the value will need to be much higher to accommodate demand," said Kapron.

"So yes, [we will get] a number of corrections before we get to something stable but [this is] not a bubble."

(Read more: Somebody tell Jared:This Subway takes bitcoins)

Bitcoin has appreciated rapidly over the past year; as of Monday, the value has increased more than 50-fold from $11.00 in mid-November 2012.

US authorities see benefit of bitcoin
At a U.S. Senate hearing on the controversy and risks surrounding Bitcoin, U.S. officials expressed optimism over the virtual currency. CNBC's Mary Thompson reports.

The volatile trade comes as U.S. federal authorities on Monday signaled their willingness to accept it as a legitimate payment alternative.

Kapron said the fact that regulators recognized that Bitcoin was a "legitimate" financial service is important.

(Read more: Is bitcoin a pioneering technology?)

"I think there were a lot of people sitting on the sidelines and waiting to get into Bitcoin from a merchant, consumer and investor perspective as it hadn't received the government's blessing. Granted there will most certainly be new government regulations that come out, I think what we'll see in the next few weeks is a further increase in Bitcoin's value as new Bitcoin buyers come onto the market," he said.

— By CNBC's Li Anne Wong. Follow her on Twitter: @LiAnneCNBC

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