Bitcoin showed a deep plunge in its value as Chinese central bank raised concerns on Friday about the use of cryptocurrency. The drop in the value succeeded the meteoric increase in the value of the currency in the past two weeks.

China's central bank said on Friday that individuals and institutions should remain rational while investing in virtual currencies including bitcoin. The Shanghai head office of the People's Bank of China (PBOC) said that the currency is experiencing abnormal movements. The bank officials also met representatives of BTCC, a major bitcoin trading platform in the country.

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Bitcoin saw a sharp rise in its value, gaining over 40 percent in the last two weeks to hit $1,139 mark on the Europe-based Bitstamp exchange. However, its value dropped by almost 12 percent on Friday as Chinese yuan recorded gain in its value.

Bitcoin plunged to as low as $871, down almost 25 percent from its peak value on Wednesday. However, it later recovered to nearly $900, still showing the worst two-day performance since early 2015.

The People's Bank of China repeated its 2013 stance as it clarified that bitcoin does not amount to a real currency and thus cannot be used in the market. Charles Hayter, CEO of digital currency data analysis website Cryptocompare, said, "This is the Chinese authorities saying: we're watching."

Hayter also revealed that bitcoin and yuan trading may have accounted for nearly 98 percent of the transaction volume in the market in the past six months. It is reported that such transactions may be used for transferring offshore in an anonymous and quick manner. 

Tagsbitcoin, yuan, china, people's bank of china