A report of a Commodity Futures Trading Commission subpoena on major cryptocurrency exchange Bitfinex and an Securities and Exchange Commission emergency asset freeze on an initial coin offering added to negative sentiment that day.
Despite the news Wednesday, Brian Kelly, CEO of BKCM, said the crackdown could be an upside for digital currencies.
"It's a good thing for the industry, Facebook and Google ads were always a red flag for me," Kelly said. "It's not having any impact on price."
Kelly attributed the downward moves to more global regulatory fears.
"Selling is driven by fear of another China ban, supposedly coming in next 24 hours," Kelly said. "My view is it will be a nothing burger since China has been banning bitcoin since 2013."
Bitcoin's one-week performance
Separately, a House Financial Services subcommittee is set to hold a hearing on cryptocurrencies and initial coin offerings Wednesday.
Bitcoin prices dropped from above $11,000 to below $9,000 last week following a statement by the SEC that expanded its scrutiny to cryptocurrency exchanges, and news of compromised accounts on a major Hong Kong-based exchange Binance.
Jack Tatar, co-author of "Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond," pointed to continuing regulatory uncertainty in Wednesday's price moves.
"We also have the threat and lack of clarity about regulations which is also weighing on the entire cryptoasset space, not just bitcoin," Tatar said, adding that any break below $8,000 "will be disconcerting."
Other cryptocurrencies, or "alt-coins" moved in lockstep Wednesday. Ethereum fell roughly 9 percent from the open, trading near $627 as of 1:30 p.m. ET, according to CoinDesk. Bitcoin cash fell 9.1 percent from the high and was trading near $971 Wednesday.
Ripple was down 8.6 percent from the open, trading near 72 cents, according to Coinmarketcap.
WATCH: Bitcoin bloodbath heats up, are stocks next?