The world's most popular cryptocurrency Bitcoin was last
down 7.5% at $32,779 after falling as low as $31,977. It has lost nearly a
quarter since touching a record $42,000 on Jan. 8.
The pullback comes amid growing concerns that bitcoin is one
of a number of financial market price bubbles.
Fears that U.S. President Joe Biden's administration could
attempt to regulate cryptocurrencies have also weighed on sentiment, traders
said.
During a Senate hearing on Tuesday Janet Yellen, Biden's
pick to head the U.S. Treasury, expressed concerns that cryptocurrencies could
be used to finance illegal activities.
"I think many are used, at least in a transactions
sense, mainly for illicit financing, and I think we really need to examine ways
in which we can curtail their use and make sure that money laundering does not
occur through these channels," said the former chair of the U.S. Federal
Reserve.
Joseph Edwards of cryptocurrency broker Enigma Securities
said these comments had a substantial impact.
"The action over the last 36 hours or so has largely
been rippling outwards from the Janet Yellen comments on crypto," he said,
adding that it was still unclear exactly what, if any, moves the Biden
administration would take.
"We do think it's probably still just a lapse in
momentum rather than a sea change, though."