Last week, it emerged that South Korea was reportedly moving to rein in speculative cryptocurrency trading with a potential bill to ban cryptocurrency trading. The country's government has since toned down its stance, and on Monday said it would only make a decision on how to move forward after "sufficient consultation and coordination of opinions."
Bitcoin dropped more than 19 percent to a low of $10,969.15 on Tuesday, its lowest since early December, according to CoinDesk. CoinDesk's bitcoin price index tracks prices from cryptocurrency exchanges Bitstamp, Coinbase, itBit and Bitfinex. As of 4:04 p.m. ET, bitcoin was trading more than 18.5 percent lower around $11,048, according to CoinDesk.
Trading in South Korean won accounted for about 3.5 percent of bitcoin trading volume, according to CryptoCompare. U.S. dollar-bitcoin trading had the largest share at nearly 42 percent, the website showed.
Bitcoin 3-month performance
Other major digital currencies including ethereum and ripple also fell significantly. According to CoinMarketCap data, ethereum dropped 22 percent to $1,007, while ripple fell 30 percent to $1.17.
Investors also monitored reports of an escalated crackdown on the cryptocurrency market in China.
On Monday, Bloomberg reported that authorities in China were planning to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralized trading. Regulators will also target people and companies that provide market-making, settlement and clearing services for centralized trading, the publication said, citing unnamed sources.
And on Tuesday, a Chinese central bank official reportedly said that authorities should ban the centralized trading of digital currencies, adding weight to concerns of further suppression of the country's cryptocurrency market.