Earlier gains on Bitcoin were wiped out with Litecoin, Ethereum and Ripple following suit.
Ethereum dropped by as much as 12 percent.
The dramatic falls came after Bitcoin and the broader digital currency markets had been enjoying significant gains.
Bitcoin prices hit their highest in a month yesterday.
Analyst Charles Hayter had welcomed the recent gains, describing them as “good news” and stating that they offered “some relief” but did warn the market was providing “mixed signals” as to what it will do next.
Some analysts had issued warnings to investors that a major Bitcoin sell-off was imminent.
Experts said a significant rebound to the $7,200 to $7,300 range in the next 12 to 24 hours could make avoiding a downturn to mid-$6,000 possible.
But they warned a dive below the $7,000 support level, as seen in May and July, could see prices fall as low as $6,000.
Cryptocurrency trader Edward Morra said: “Bitcoin is coiling tighter and tighter, making everyone wonder what to expect, but I feel like correction is incoming, if not a reversal.
“However, we also need to understand that shorting here is being in the vanguard, as there are no clear confirmation of a trend change as of yet.”