Bitcoin firmed above the key $500-level on Thursday, as prices of the virtual currency continued to recover from sharp losses suffered earlier in the week.

Bitcoin (BTC/USD) jumped 2.28%, or $11.40, on Bulgaria-based BTC-e to trade at $511.40 during U.S. morning hours. Prices hit a session high of $530.00 earlier, the most since August 14.

Elsewhere, the price of a Bitcoin on Slovenia-based BitStamp inched up 0.33%, or $1.71, to trade at $515.99.

According to the CoinDesk Bitcoin Price Index, which averages prices from the major exchanges, prices of the crypto-currency tacked on 0.8% to trade at $516.02.

Meanwhile, euro-denominated Bitcoin prices (BTC/EUR) shed 0.58%, or €2.29, to trade at €393.71 on U.S.-based Kraken Exchange.

Bitcoin prices tumbled sharply on Monday, before moving higher for the past three sessions as investors returned to the market to seek cheap valuations.

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.

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.

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.

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