The shock collapse comes after a sustained period of relative stability for cryptocurrency markets, potentially triggered by a major stock market sell-off.
Bitcoin lost around 7 per cent of its value and is currently trading below $6,300 (£4,700). Ethereum, ripple and bitcoin cash were hit even harder by the downturn, falling by between 10 and 12 per cent on Thursday morning.
The price falls have pushed bitcoin close to its lowest value of 2018, having dipped to around $5,800 in July.
Since a market peak in January, more than $600 billion has been wiped off the value of cryptocurrencies.
Cryptocurrency analysts have attributed the cryptocurrency price movements to the biggest stock sell-off since February.
“Having seen global stock markets take a battering in the last 24 hours on trade fears and rising interest rates as well as the price of gold and the VIX Volatility Index heading higher, it is strange that we now see the crypto market also following suit," David Thomas, the director of Mayfair-based cryptocurrency broker GlobalBlock, told The Independent.
"There was a growing feeling that bitcoin was a 'digital gold' asset and as such should weather such wider storms as equity market volatility. The fact that this hasn’t happened is interesting as it suggests to us that more and more seasoned investors with wider portfolios are getting into cryptocurrencies and are using similar equity strategies to manage their positions.
"Financial markets tend to fall a lot faster than they rise and when the equity markets see a move of this magnitude, perhaps there is a tendency to also flatten positions in crypto assets to clear the decks completely. This move indicates a high correlation between equities and cryptos, so if the stock market rout continues, then we could see further weakness in bitcoin. The key support levels to watch to the downside are $6,140 and $6,000.”
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