In trading on the Coinbase exchange, the digital currency hit a high of $19,340 before falling more than 20 percent from that level to $15,198.63. At 12:02 p.m. New York time, the cryptocurrency traded at $16,260.01.
The price swings are occurring just as the trading community prepares for Bitcoin to start trading on two established U.S. exchanges.
Futures for Bitcoin will start trading on the Chicago Board Options Exchange on Sunday evening and on crosstown rival CME Group's platforms later in the month.
That has increased the sense among some investors that Bitcoin is gaining in mainstream legitimacy after several countries.