Bitcoin offshoot bitcoin cash was down 6.9 percent, to $719.89, ethereum was down 2.78 percent, to $460.37, and litecoin was down 5.3 percent, to $82.16, according to CoinBase.

There hasn't been any one catalyst to trigger a sudden sell-off in bitcoin, though digital currency-trading security breaches and regulatory scrutiny have weighed on cryptocurrencies after bitcoin's price ran up more than 1,000 percent last year.

As of 3:14 p.m. ET, bitcoin was at $6,467.01, according to CoinBase. Last week, the largest cryptocurrency fell as low as $5,799.62, its lowest since mid-November.

Bitcoin bull Tom Lee, the only major Wall Street analyst to have a price target for the cryptocurrency, said he sees its price at $20,000 by year end, though that is $5,000 below his earlier prediction.

The popular payments app Square has pulled its application for a license to be an industrial loan company for the time being. It filed that application last year with the Federal Deposit Insurance Corp. A license would allow it to perform some of the same services as banks, such as taking in deposits. In May, Square CEO Jack Dorsey said customers were using the Cash app like a bank account, and Square had plans to seize on that trend.

The news about the FDIC application was first reported by American Banker, around the time the slide in bitcoin began Thursday afternoon.

Square said in a statement to CNBC that its application with the Utah Department of Financial Institutions was still active and that it would refile the FDIC application after amending and strengthening it.

"Square Capital is uniquely positioned to build a bridge between the financial system and the underserved, and we continue to work closely with the FDIC and Utah DFI on our applications," the statement said.

In June, New York financial regulators granted Square the go-ahead to allow New Yorkers to trade cryptocurrency on its Cash app.