See 24-hours-later update below.

Well, it happened. Bitcoin, the world’s most popular digital currency, has plummeted from a recent high of more than $1,200 to less than $500. The drop comes after China’s central bank reportedly ordered all third-party payment processing companies to halt transactions involving digital currencies.

BTC China, the country’s largest Bitcoin exchange, announced on Weibo, the Chinese social network, that it would no longer be able to accept new deposits in the Chinese Yuan currency. As of late Tuesday, prior to BTC China’s announcement, Bitcoin was trading at around $700 before dropping more than $250 to a low of $455 on the Mt. Gox exchange. It has since rebounded slightly to a price of $585, at the time of this writing.

According to The New York Times, the BTC China announcement followed a meeting between the People’s Bank of China and the 10 largest payment processing firms, during which the Chinese government put an end to the fevered digital currency investment in China.

The latest rise in Bitcoin’s value started in late September, and continued virtually unabated until Dec. 4, when it hit an all-time high of $1,242 on the popular US exchange Mt. Gox. Much of Bitcoin’s value increase is believe to have been caused primarily by an influx of Bitcoin investors and mining operations in China, along with positive reception of the digital currency by the US government.

China’s crackdown on digital currencies crushed the price of not only Bitcoin, but nearly all digital currencies, including popular Bitcoin alternatives (so-called altcoins), like Litecoin and Peercoin, as you can see from the Crypto-Currencies Market Cap chart below:

Funny enough, the only cryptocurrency to gain value over the past 24 hours is Dogecoin – a fork of the Bitcoin protocol that’s based on an Internet meme, which jumped 14.24 percent while Bitcoin lost nearly 23.67 percent of its value during the same period. Hilarious as that may be, jokey Dogecoins are worth almost nothing – $0.00026 per Dogecoin – but still, a 14 percent return ain’t too shabby.

While some Bitcoin users have literally begun talking fellow investors out of suicide, others believe now may be the perfect time to buy in while the price is low. Regardless, the reality is that Bitcoin remains extremely volatile, just as it’s always been. Historically, the price has a pattern of big jumps and fast falls. If you do choose to invest now, just be warned: You’re in for a bumpy ride.

Update: One day after Bitcoin’s cliff dive, the currency is back up near its pre-China-curb-check value, clocking in at $675-80 on Mt. Gox as of Thursday morning. The rebound lifted nearly all altcoins, save a couple of stragglers like GrandCoin and CasinoCoin, both of which fell slightly. Meanwhile, Dogecoin – that rascal – took off in a freakin’ rocket ship to the moon, rising more than 315 percent to $0.00095, the largest gain for any altcoin. 

[Image via Carlos Amarillo/Shutterstock]