After Hitting New All-Time Highs, Bitcoin Plunged 23%

The price of the digital currency bitcoin quietly hit a new all-time high Wednesday at $1,161.89. The move to an all-time high was short lived, however, as the price of one bitcoin fell as low as $888.99 on Thursday.

At its peak lows, bitcoin was lower by nearly 25 percent. By 1:15 p.m. ET on Thursday, the digital currency was trading at around $980, down nearly 15 percent for the day.

Gil Luria, an analyst at Wedbush Securities, told Bloomberg the selloff is attributed to profit taking following the "sharp" appreciation over the past few days and weeks.

Declining Currencies And Bitcoin

Bloomberg also suggested that the declining value of bitcoin could be attributed to a rally being seen in the Chinese yuan. From a historical standpoint, value of the yuan along with the Indian rupee is inversely correlated with bitcoin.

In other words, when the yuan and rupee lose value, many Chinese and Indian individuals buy bitcoins to fight against their declining currency.

"Its run-up has been broadly correlated with the weakness in" the Chinese and Indian currencies, Steven Englander, an analyst at Citigroup told Bloomberg. "There is speculation that the Chinese authorities may try and hamper the use of bitcoin as a way of getting around Chinese capital outflow restrictions. At the best of times it is pretty illiquid, so even a small imbalance can have a big impact on price."