Bitcoin jumped more than 12 percent Thursday to an all-time high of $2,791.70 before plunging and giving up the day's gains.
The rise, based on strong demand out of Asia, had brought its gains for the month of May to more than 100 percent, according to CoinDesk.
But the digital currency's volatility became apparent later in the session as it suddenly sank by more than $315 to trade lower.
"It feels like 1999 right now," said Brock Pierce, managing partner of Blockchain Capital, from the sidelines of the Token Summit conference in New York Thursday. "We may end up having a similar outcome. We could see a big correction here."
As of 4:46 p.m. in New York, bitcoin had recovered from that plunge, trading 3.18 percent higher at $2,555.13.
The earlier rollover came just as interest in bitcoin was peaking and apparently overwhelming some digital exchanges where the coins can be bought and sold. Coinbase told Reuters in the afternoon: "We're continuing to experience degraded performance on our website and mobile app."
At Thursday's record, bitcoin had gained more than 45 percent in a week and more than 180 percent this year.
"There is no question that we are in the middle of a price frenzy," Brian Kelly of BKCM said in a note to clients earlier Thursday. "There will be a correction and it could be severe, but it's unclear if that correction will start from current prices of $2700 or from some place much higher."
Kelly, a CNBC contributor, manages a hedge fund focused on digital currencies.