The price of bitcoin has plummeted by 50 percent since record highs in late November, with selling accelerating on Wednesday after reports that the People's Bank of China (PBoC) has ordered third-party payment providers to stop using the virtual currency.

The price of a bitcoin fell to below $600 after stabilizing near $800 for the last couple of weeks after a price slump from $1,200 in late November. At 8 a.m. London time on Wednesday the currency was trading at $555 on major exchange Mt Gox and $550 on CoinDesk's index, which measures a basket of prices around the world.

(Read more: Bitcoin crashes 20% on China clampdown fears)

China's central bank has ordered third-party payment agencies - which provide clearing services for bitcoin exchanges - to stop any "custody, trading and other services" related to the virtual currency, according to a report Tuesday by Yicai.com. The Chinese website - which is affiliated with the China Business Network TV station - added that platforms were told to end working relationships with virtual currency exchanges before Chinese New Year which commences at the end of January.

Zhou Jinhuang, the deputy director of payment clearance at the People's Bank of China is reported to have chaired the closed-door meeting on Monday when more than 10 third-party payment platforms were given the news. Attendees included a representative from Alipay, which is China's leading third-party online payment solution, according to its website.

(Read more: Buyer beware: Bitcoin's fate could rest with China)

BTC China, the world's largest bitcoin exchange, according to Bitcoinity.org, stopped accepting deposits in Chinese yuan on Wednesday due to the clampdown. Bobby Lee, the CEO of BTC China told CNBC that he had received notice from his third-party payment processor on Wednesday.

"They essentially have cut us off from allowing customer deposits into BTC China's bitcoin exchange," he said. "Customers don't have to worry, the deposits are still here, the withdrawals will still be allowed. So there's no need to panic on that."

Lee added that he believes the recent clampdown is not due to government officials in the country fearing that bitcoin is helping customers to move yuan out of China. "Bitcoin exchanges are legal...so our business model is still valid but we're under some pressure in terms of being able to work with third-party payment companies. So we're looking for alternatives," he said.