- Bitcoin fell as low as $6,783 amid heightened fears of a global trade war.
- Ethereum, ripple and other major cryptocurrencies also saw sharp drops.
- China unveiled new tariffs on 106 U.S. products on Wednesday.
Bitcoin dropped below $7,000 on Wednesday as the price of several major digital currencies fell.
The world's largest cryptocurrency by market value fell 8 percent to as low as $6,782.64, according to data from industry website CoinDesk, which tracks the price across a number of exchanges.
Mati Greenspan, senior market analyst at eToro, said that the move was less correlated to recent fears of a global trade war and more associated with traders evaluating the assets in their portfolio and trying to assign value to them.
"I think that there is a big connection in the way that people are managing their portfolios and the cryptocurrencies have been increasingly correlated with the stock markets especially in the last few weeks," he told CNBC in a phone interview.
"This (comes) as more and more brokers add bitcoin, the liquidity bridges are being built."
Ethereum and ripple, the second and third-largest cryptocurrencies by market capitalization respectively, both saw sharp drops on Wednesday. Ethereum fell more than 9 percent to $375.31 while ripple fell more than 10 percent to 50 cents.
China unveiled new tariffs on 106 U.S. products on Wednesday, a move that has shaken investors and further ignited fears of a trade war.
Cryptocurrencies like bitcoin, which are decentralized and not backed by governments, are extremely volatile assets.
Charles Hayter, chief executive of CryptoCompare, said that investors were likely fleeing to safer investments as protectionism concerns took hold.
"In the grand scheme of things, cryptos lie on (the) extremely risky end of the spectrum and are for times of hot money," Hayter told CNBC in an email.
"The hint of a trade war puts a bit of fear into the mix and as we all now markets correlate in various periods depending on the exogenous factors."
Bitcoin suffered its worst ever start to the year this year, dropping 48 percent over the first quarter. The cryptocurrency hit an all-time high near $20,000 in December.