Bitcoin could rally almost 40 % to hit $6,000 before the end of the year but investors should prepare for more volatility, according to industry experts. 

The cryptocurrency was trading around $4,333 as at Tuesday.

The third quarter has been one of the most eventful in bitcoin's history. It’s up over 74 % in the Sept. quarter, with a shifting landscape in regulation & developments in the underlying tech taking place in the last 3 months.

Here is what has happened so far & what experts think is coming next.

Infighting & split

Bitcoin faced record-high transaction times because of congestion on the network. To solve that, the amount of data that could be processed in one transaction needed to increase. But the community was divided on how to decipher this.

This resulted in a "fork" earlier this year that split bitcoin in 2. Bitcoin remained, but a new crytocurrency called bitcoin cash was created.

On the core bitcoin network, an upgrade known as SegWit2X was applied, which would help increase the transaction speed. The full back story can be read here.

Bitcoin's market cap is close to 10 times that of bitcoin cash. Since it started trading at the starting of August, bitcoin cash has risen to almost $900 before falling to current levels of around $402, according to Coinmarketcap.com.

Shift of power to Japan

China was once the leading driver of the bitcoin price. But regulators in the country have been cracking down on the cryptocurrency, banning so-called initial coin offerings (ICOs) where companies raise money through cryptocurrencies.

China's chief bitcoin exchanges OKCoin, Huobi & BTCChina have stopped trading for customers on the mainland. At the start of the quarter, Chinese yuan accounted for close to 17 % of bitcoin trade worldwide, according to industry website CryptoCompare. By the end of the quarter, it was less than 3 %.

In the meantime, Japan has been more open to cryptocurrencies. Regulators there legalized bitcoin & major retailers have started accepting it as payments & last week, Japan's Financial Services Agency (FSA) officially recognized 11 companies as registered cryptocurrency exchange operators.

CNBC reported that key Japanese banks are looking into creating their own digital currency called the J-Coin, with backing from foremost institutions.

Record high

The third quarter also saw bitcoin hit an all-time high of $5,013.91, according to data from CoinDesk.

Regulatory support in some markets, likewise rising interest from institutional investors, has helped boost the value.

$6,000 bitcoin in sight?

"Throughout the year we've been predicting the bitcoin price will surpass $5,000 & creep closer to $6,000 by year's end. That prediction is looking more in line with market sentiment these days," Thomas Glucksmann, head of APAC business development at Gatecoin, a cryptocurrency exchange, told CNBC by email.

But he warned investors to prepare for more volatility in November. This is because some in the bitcoin community may move to reject SegWit2X. This could create another split in bitcoin, & potentially create another cryptocurrency.

Charles Hayter, CEO of industry website CryptoCompare, said that bitcoin could hit $5,000 by the end of 2017. This will be supported by increased regulation to cryptocurrencies & ICOs.

"Bitcoin's biggest price catalyst is regulation. Japan has breathed life into the price & as the fog of uncertainty clears in other jurisdictions, clarity on regulation will release a break on the price," Hayter told CNBC by email.