Bitcoin: If currency crashed, plunge would harm its investors but not economy

If bitcoin, which skeptics say is a bubble, suffers the same fate as past financial manias, look out below.

Fears of a bitcoin crash are growing amid an early-year plunge that has wiped out 50% of the digital currency's value since its December peak of $19,500 per coin.

"There is significant precedent to suggest that the more rapid the appreciation, the more rapid the depreciation," says Scott McGann, a finance lecturer at San Diego State University.

Bitcoin's wild ride continued Monday when it was down more than 11% at $10,050 after cratering last week to a seven-week low of $9,200.

History is filled with examples of big busts after gargantuan gains. The Nasdaq fell nearly 80% after the dot-com stock bubble burst in 2000. The Dow tumbled 86% following the 1929 stock market crash. The Dutch tulip bulb craze in the 1600s had a similar bad ending.

If the pain following past popped bubbles is a guide, bitcoin believers who cheered the cryptocurrency's 1,400% gain last year should brace for further declines.

The reason: The bitcoin bubble is the biggest ever. Bitcoin's value has risen 65-fold, which tops the 50-fold rise of tulips in the 1630s and tech stocks' four-fold rise in the 1990s, according to Convoy Investments, a New York-based investment firm.

"Historically, most major asset bubbles tend to lose close to 80% of their peak value," says Howard Wang, co-founder of Convoy Investments.

Recent bitcoin turbulence has been sparked by fears of a regulatory crackdown by foreign governments.