Central banks must warn over Bitcoin bubble, says RBS chairman as online currency rockets to $16,000

The price of bitcoin seesawed yesterday as fears grow that a colossal bubble in the online currency is about to burst.

It rose from below $13,000 to over $16,000 in under 24 hours, in a wild day’s trading.

Many experts have compared it to the frenzy for tulip bulbs in the 17th century which saw prices climb 2,200 per cent in four months before crashing. By comparison, bitcoin had risen 1,800 per cent this year at its peak.

The mania has prompted Royal Bank of Scotland chairman Sir Howard Davies to call on central banks around the world to protect savers from disaster.

Many experts have compared Bitcoin's rise to the frenzy for tulip bulbs in the 17th century which saw prices climb 2,200 per cent in four months before crashing

He said they are failing to act out of fear they will be labelled technology-hating dinosaurs.

Bitcoin started the year at $1,000 and has doubled in less than a fortnight. It was trading around $16,000 at the time of going to press.

Experts are now warning that its rise is completely unsustainable and unprecedented in the modern era. Davies, 66, compared the currency to the vision of hell portrayed by Italian poet Dante Alighieri.