BITCOIN plunged another 12 percent yesterday after China's central bank urged investors to take a rational approach to the digital currency, which is on track for its heaviest two-day falls in two years.

Bitcoin had gained more than 40 percent in two weeks to hit a three-year high of US$1,139.89 on Wednesday on the Europe-based Bitstamp exchange.

But the digital currency plunged as the yuan soared on Thursday, falling as much as 20 percent at one point, before closing the day around 10 percent down on the day.

Yesterday it fell to US$887, having lost nearly a quarter of its value since Wednesday's peak.

This prompted officials to meet representatives of a major bitcoin trading platform in China, BTCC.

Bitcoin prices had showed abnormal fluctuations, the Shanghai head office of the People’s Bank of China said in a notice.

The PBOC cautioned against potential risks in the platform’s operations and asked it to carry out “self-inspection” according to the law. It stressed Bitcoin is not a currency and cannot be circulated as a real currency in the market.

Source: Agencies