Bitcoin cratered Thursday, living up to its volatile reputation after hitting a 17-month high a day earlier.

The world's most widely traded cryptocurrency dropped to a low of $10,373.75 Thursday afternoon — a roughly $3,000 drop from where it was trading Wednesday.

Bitcoin had rallied to a high of $13,485.85 Wednesday afternoon, its highest price since January 2018, according to industry site CoinDesk. It then fell sharply after U.S. markets closed. The cryptocurrency was trading around $10,823 by 3:30 p.m. ET.

The steep decline came at the same time as an outage on popular cryptocurrency trading platform Coinbase. A Coinbase spokesperson told CNBC the site was down "for a short period of time due to high volume."

"Even the most optimistic crypto bulls would tell you that a 50%+ move in a week is too much too fast," said Genesis Global Trading CEO Michael Moro. He said a "key driver" behind the price whiplash was leverage — borrowing money — to make a trade.

"The presence of leverage exacerbates the moves in both directions and affects the speed dramatically," Moro told CNBC. "Of course bitcoin has a history of doing this (both upward and downward), but it's hard to call the magnitude of the move healthy."

Brian Kelly, CEO and founder of BKCM, also cited leverage for the dramatic swings. As the prices went up, so did borrowing costs, which make it more expensive to make a bullish bet on bitcoin going up, Kelly said.

Bitcoin has been marked by volatility in its 10-year existence. That and its high transaction costs have largely kept it from being used as an everyday payment method. Instead, it's seen by some backers as a store of value, or "digital gold." That global hedge use-case seemed unlikely in 2018 after it ended the year down more than 73 percent. But some are attributing its more than 200% gains this year to its use as an uncorrelated hedge against global tension and the U.S.-China trade war.

Bitcoin has rallied nearly 30% since Facebook unveiled its new Libra cryptocurrency project. Analysts have attributed bitcoin's recent price bump to more awareness of the digital asset class and interest from professional investors.

"The noise over Facebook's coming plan to launch a digital cryptocurrency, discussed here last week, must have helped to revive interest in Bitcoin," Jefferies analyst Christopher Wood said in a note to clients Thursday.

Michael Novogratz, CEO Galaxy Digital Holdings, also said Facebook was a catalyst for bitcoin breaking above $10,000.

"One of the largest companies in the world said we believe in cryptocurrencies," told CNBC's "Squawk Box". "If you're an institutional investor who's getting close and still worried about investing, it makes you that much more confident."

Novogratz also said bitcoin's activity is largely driven by capital flight from China.

"A huge amount of the volumes of what's going on in bitcoin and other currencies is coming out of Asia," he said.

Prices are still well off of their all-time high near $20,000 that was hit in December 2017. Novogratz said bitcoin will likely sit in a range between $10,000 and $14,000.