Bitcoin fell again Thursday, bringing its two-day losses to more than 18 percent, after news of increased regulatory scrutiny of cryptocurrency exchanges.
The cryptocurrency hit a high of $11,432 Tuesday but had fallen 18.4 percent to near $9,319 as of 3:34 p.m., according to CoinDesk's bitcoin price index. Earlier Thursday, bitcoin's losses suddenly accelerated and the cryptocurrency hit a low of $9,075.87, down just over 20 percent over the last two days.
The sudden midday drop "caught me by surprise," said Nick Kirk, quantitative developer and data scientist at Cypher Capital, a cryptocurrency trading firm. "It could be a hangover from SEC news ... but actually, I think regulation is a good thing for the space."
Bitcoin dropped below $10,000 Wednesday after news of compromised accounts on a major Hong Kong-based exchange and a statement from the U.S. Securities and Exchange Commission that expanded its scrutiny to cryptocurrency exchanges. News overnight from Japanese regulators added to those concerns.
Bitcoin this week
Some analysts also attributed bitcoin's decline Thursday to technical factors.
Bitcoin failed to break above a resistance level around $11,765 on Monday, "and has been in corrective phase since," said Robert Sluymer, technical strategist at Fundstrat Global Advisors.
"Yesterday as the exchange hack developed, bitcoin broke a key technical level that led to a collapse to its next support level [around] $9,400," he said. "Today again, bitcoin retested this level and has yet show evidence that it will hold."
The next levels of support are at $8,759 and $8,000, down about 5.8 percent and 14 percent, respectively, from Thursday afternoon's prices.
Japan's Financial Services Agency suspended operations Thursday at two relatively small exchanges, Bit Station and FSHO, for one month. The regulator said a manager at Bit Station used customers' bitcoins for personal purposes, according to wires and a Google translation of an online statement.
Japanese authorities also ordered business improvements at five other exchanges, including Coincheck. The exchange lost more than $500 million worth of Nem's xem coins due to a hack in late January. A senior official from the Japanese FSA said in a Reuters report that Coincheck had enough funds to reimburse customers.
The announcements followed news Wednesday that some accounts at Hong Kong-based Binance may have been compromised due to phishing.
"The [application programming interface] for the exchange malfunctioned and sent sell orders into the market," said Brian Kelly, a CNBC contributor and head of BKCM, which runs a digital assets strategy for clients.
Separately Wednesday, the SEC issued a "Statement on Potentially Unlawful Online Platforms for Trading Digital Assets." The commission said if an exchange was trading digital assets that are considered securities, then the company must register with the commission or apply for an exemption.
The statement also said that securities laws may apply to companies storing digital assets, or "wallets." The SEC did not specifically mention bitcoin, and analysts generally expect that the commission is focused on new digital coins sold through promotional fundraisers called initial coin offerings.
A report of a sale by the trustee of funds from collapsed Japanese crypto exchange Mt.Gox also contributed to the negative sentiment.
In a court document filed Wednesday, Tokyo attorney and bankruptcy trustee Nobuaki Kobayashi announced that he had sold roughly $400 million in bitcoin and bitcoin cash and plans to consult with the court on "further sale" of those assets.
"The dump of the Mt. Gox bitcoin is definitely a factor. The uncertainty around the recent SEC regulations towards exchanges is another factor" behind bitcoin's drop, said Jack Tatar, "co-author of 'Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond."
"Since we're now in the world of institutional investors, because of futures and more mainstream press, they are playing a role," Tatar said. He added that cryptocurrency investors are more interested in buying bitcoin versus "alt-coins," but have less funds to do so because the alt-coins are also falling in price.
— CNBC's Thomas Franck contributed to this report.