Bitcoin briefly plunged below $10,000 late Tuesday afternoon on Coinbase, after first topping the psychologically key level in late November.
Other major digital currencies also sold off sharply. Digital currency ethereum plunged 30 percent Tuesday, to below $1,000, while ripple fell below $1.
Ethereum recovered the $1,000 level as of 6:03 p.m. ET. Less than half an hour ago, the digital currency traded on Coinbase near $964, or 26 percent lower over the last 24 hours, after hitting a low of $854 earlier in the afternoon. Coinbase is the leading U.S. marketplace for trading bitcoin, ethereum, litecoin and bitcoin cash.
The declines followed comments from South Korean authorities that indicated tougher regulation on digital currency trading. However, there was no apparent driver behind the late-afternoon decline.
Bitcoin dropped 28 percent to a low of $9,969 on Coinbase, but quickly jumped back up to trade back above $11,000 as of 6:02 p.m., ET.
Bitcoin has now nearly halved in price after topping $19,800 in mid-December. But the digital currency remains more than 1,100 percent higher over the last 12 months, according to Coinbase.
Ripple, the third-largest digital currency by market capitalization, traded near $1.08 after earlier plunging 46 percent to near 90 cents, according to CoinMarketCap. Last week, the site began excluding prices from some South Korean exchanges, where ripple trades about 20 cents higher.