Bitcoin rallied sharply on Tuesday, as investors returned to the market to seek cheap valuations in wake of recent losses which took prices a three-month low on Monday.
Bitcoin (BTC/USD) jumped 7.16%, or $32.51, on Slovenia-based BitStamp to trade at $486.35 during U.S. morning hours.
A day earlier, prices on BitStamp fell to $444.44, the weakest level since May 19, before trimming losses to settle at $475.22, down 4.35%.
Bitcoin prices were likely to find support at $441.51, the low from May 19, and resistance at $510.00, the high from August 18.
Elsewhere, the price of a Bitcoin on Bulgaria-based BTC-e surged 8%, or $34.59, to trade at $466.94.
Prices on BTC-e plummeted to $309.00 on Monday, in what is being referred to as a "flash crash", before recovering to end the day at $440.04.
According to the CoinDesk Bitcoin Price Index, which averages prices from the major exchanges, prices of the crypto-currency advanced 3.54% to trade at $476.97.
Meanwhile, euro-denominated Bitcoin prices Bitcoin (BTC/EUR) rose 4.38%, or €15.47, to trade at €369.00 on U.S.-based Kraken Exchange.
Market participants speculated that Monday's losses came as a result of excessive margin trading, which caused a flash crash on the BTC-e platform and at least on one additional exchange.
The steep decline then had a cascading effect across the larger Bitcoin market, which dragged prices sharply lower.
A number of traders and market analysts also attributed the plunge to price manipulation by short-term profiteers who are deliberately driving prices down to eventually buy them back at lows.
Prices of the virtual currency have lost more than $100, or 17%, since the U.S. Consumer Financial Protection Bureau issued a lengthy set of risks that virtual currencies pose to consumers on August 11.
Bitcoin is digital cash and is not backed by a government or central bank to regulate or issue it. It can be used to purchase goods and services from stores and online retailers.