In less than 24 hours, bitcoin’s price has plummetted approximately 14%. At 14:14 UTC yesterday, the cryptocurrency was trading at $11,342.81. At 13:16 UTC today, it was trading at $9,752.97.

The cryptocurrency first plunged below $10,000, a mark it crossed on Tuesday, and at 19:16 UTC yesterday. Subsequently, its price crashed by $1,000 in less than 10 minutes to levels below $9,000. Since then, bitcoin’s price has alternated between $10,000 and $9,000. For example, it reached a high of $10,676.70 at 04:44 UTC before declining to $9,9912.30 at 10:28 UTC. (See also: 5 Ways To Short Bitcoin.) 

In the wake of bitcoin’s decline, the price trajectory for an overwhelming majority of cryptocurrencies was a sea of red. The top 10 most-traded cryptocurrencies registered double-digit declines. Dash was the only cryptocurrency with a downward price spiral in single digits of approximately 4%. At 13:30 UTC, the overall market capitalization for cryptocurrencies was $294 billion, down 13% from its valuation 24 hours ago.  

Outages and a Bubble

Bitcoin’s record high yesterday led to a flurry of trading at bitcoin exchanges and crashed some of them. Based on Coinmarketcap data, bitcoin trading reached a high of $10.5 billion yesterday. It is currently at $9.99 billion.  

According to reports, Coinbase and Gemini, two of the largest cryptocurrency exchanges in the world, crashed. Dave Farmer, head of business operations at Coinbase, said the site’s trading platform experienced “all-time high” numbers early Wednesday, which slowed down trading for some users. Gemini, another prominent cryptocurrency exchange, also had problems in performance after a surge in trading.

According to Nolan Bauerle, the cryptocurrency’s price is caught in a news loop. “All news seems to feed demand, which itself creates news and feeds demand,” he said.

Bitcoin’s record highs yesterday was reached on the back of a positive news cycle, including a report about Nasdaq introducing bitcoin futures. But its news loop has since been mostly negative. Even as users trade on bitcoin’s momentum, a growing chorus of voices is calling the current run-up in bitcoin’s price a bubble. (See also: Is Bitcoin In Bubble Territory?)

Tax Implications

In the meanwhile, the IRS might be coming after traders who booked profits from bitcoin trading between 2013 and 2015. The government agency won a court battle in San Francisco yesterday after a judge ordered Coinbase to hand over identification information relating to users who have conducted bitcoin trades worth more than $20,000. In its petition, the IRS cited the "reporting gap between the number of virtual currency users Coinbase claims to have had during the summons period."